Two Investment Gurus Square Off on the Future of Indexing

Over the past three decades index-style investing has moved from the fringes to the mainstream with an estimated $3 trillion now committed to this simple strategy -- to match broad market returns and give up as little as possible to fees and taxes. Clearly indexing has served investors well and is here to stay. But can it be made even better? Wharton finance professor Jeremy Siegel thinks so. The standard index which gives more weight to stocks of bigger companies should be replaced by ”fundamental indexing” that assigns each stock a role based on factors like corporate sales or dividend payments Siegel says. But many index-investing experts are unconvinced. ”I don’t believe in new paradigms ” says John C. Bogle founder of the Vanguard Group mutual fund company which specializes in traditional index investing. Siegel and Bogle offer their different views on indexing.

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