Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
From Article: "Unlike traditional market-cap weighted index funds, strategic beta equity funds hold a basket of stocks that are selected and weighted by characteristics other than company size. For example, one strategic beta fund may focus on high dividends while others may emphasize low volatility, momentum or quality. The objective of strategic beta is to improve performance by passively tracking an index that is not based on market-cap weighting. In other words, strategic beta is an enhanced form of passive investing."
I guess in this category I have four: PKW (buybacks, largest equity holding), PJP (selected pharma), VIG (selected dividend growth stocks) and RHS (equal weighted Consumer Staples). All had an excellent 2013, first year I owned them. Most likely long term holds for all.
So the contention is that there are two kinds of passive investing: cap-weighted and other. I think it's more useful to think of passive investing as consisting of a dozen or more different varieties, one of which is cap-weighting. This cap-weighting straightjacket on investment thinking has gone way past its expiry date.
Comments