Since market-cap weighted indexes weight companies according to market capitalization, and respectively the stock price, they often reflect the investors’ enthusiasm over certain sectors. To remove market exuberance from the indexing process, FTSE, together with its partner Research Affiliates, has developed FTSE RAFI Index Series, a range of indices that
are based on fundamental metrics of company size including sales, earnings, book value, cash flow, and dividends. |
