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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.

The Pitfalls of a Market-Cap-Weighted Strategy
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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.

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