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The Pitfalls of a Market-Cap-Weighted Strategy

Though an efficient way to track the market, the strategy has its drawbacks.


Ben Johnson: For Morningstar, I'm Ben Johnson. Market-cap-weighted indexing is an efficient way to leverage the wisdom of crowds. Unfortunately, harnessing the market's wisdom also involves participating in its madness. Market-cap weighting, like any strategy, has its pitfalls. Here to discuss these pitfalls and a fund that looks to exploit them and take advantage of them is Phil Bak. Phil is the founder and CEO of Exponential ETFs.

Phil, thanks so much for joining me.

Ben Johnson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.