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Thursday, April 30, 2009

The "Better Mousetrap " Redux

The WSJ today has a short piece on fundamental index ets (see yesterday's post). The article lists the one year performance was relatively dismal for most of these etfs compared to the cap weighted s+p 500 (-38.1)and russell 3000.

But what I found more interesting is that the one year numbers seem to give credence to the argument that these "new methodologies" are simply another form of value weighted index and those have been available in funds and etfs for quite a long time.
Consider the one year performance for the etfs mentioned in the article:

Powershares Dynamic Market (PWC) -35.3
Powershares RAFi 1000 (PRF) -43.0
Wisdomtree Earnings 500 (EPS) -37.8
Wisdomtee Large Cap Dividend (DTN) -41.3

Now consider the performance for the same period for the following etfs and funds that have been around for far longer using "old" value weighter screens. Draw your own conclusions on whether the "better mousetrap" is really anything new.

DFA Large Cap Value (DFLVX) -41.88
Vanguard Value (Lg Cap) VTV -37.63
Ishares Russell 3000 Value (IWW) -38.62

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