Getting to the Heart of Your World

The idea of fundamental index has actually been in my mind going back to the mid 90s. I had long thought that a sales weighted or a book value weighted index would be interesting and would probably beat the market by some margin. Instead of mirroring the looking composition of the market, think of it as an economy weighted index. And we were able to test it back to 1974, so about 30 years of data. To our astonishment, it beat theMarket by 2.5% a year. It was expecting a few dozen basis points, not hundreds. This really starts to get to the heart of your world.

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