Many investors, notably proponents of fundamentally weighted indexing, contend that index funds that follow capitalization weighted indexes systematically put more money into over valued stocks and systematically under invest in undervalued stocks.
Additionally many investors believe that small cap stocks are inherently not as efficiently priced due to the fact that they garner less sell side research coverage and less investor interest in general
With that in mind:
"According to research from Prudential Equity Group LLC, three ETFs that track small-company stock indexes now account for 20% to 40% of the trading of certain smaller stocks in the popular Russell 2000 small-cap index. The three ETFs are Barclays Global Investors' iShares Russell 2000 Index Fund, iShares Russell 2000 Value Index Fund and iShares Russell 2000 Growth Index Fund." (Source WSJ)
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