Six Reasons To Consider Dumping SPY
September 27, 2010 at 11:00 AM EDT
The meteoric rise of the ETF industry–and to a smaller extent the introduction of index mutual funds some 20 years earlier–has had the effect of transforming indexes from hypothetical measures of performance into investable assets. As indexing strategies continue to gain more widespread acceptance with all levels of investors, the scrutiny of construction and maintenance methodologies underlying ETF-linked indexes has intensified considerably. And where potential pitfalls have been uncovered and explained, ETF issuers have been quick to provide investors with a number of alternatives. Investors are creatures of habit, so it isn’t surprising that the majority of equity ETFs are linked to indexes that utilize long-standing, familiar construction strategies. The indexes underlying many of the most popular ETFs are market cap-weighted benchmarks, meaning that the companies with the largest equity value generally receive the largest weightings. But while the ETF industry has helped to reinforce the popularity of these indexes–such [...] Click here to read the original article on ETFdb.com. Related Stories: Are Your Cap-Weighted ETFs Leaders Or Laggards? Weighting Methodologies: An ETF Report Card Does Your Portfolio Need A “RAFI ETF”?