No. of Recommendations: 1
>> Based on information I read on this site several years ago I placed 100% of my 403b contributions in an S&P 500 index. There was an article in the June 14th Wall Street Journal singing the benefits of "fundamental indexation" versus the traditional "capitalization-weighted" indexes. <<

I'm not saying it's a bad idea, but I dismiss the idea of "fundamental indexing" being true indexing. When you use fundamental indexing, you are weighting a stock's representation in the index by assessing its fundamentals and heavily weighting stocks you think are "undervalued".

That's certainly not a bad thing to do as far as stock picking goes, but as far as I'm concerned it's not indexing. And as far as your 403b goes, chances are you don't have a "fundamental index fund" to choose from.

If you're interested in this, I'd consider splitting my portfolio into the "core" S&P 500 index fund and a "value" fund -- assuming the value fund performs at least inline and has relatively low expenses. If the value fund is also an index -- so much the better in terms of reducing cost. A value fund is usually trying to do the same thing as "fundamental indexing" anyway; it tries to identify stocks the manager thinks are undervalued relative to its fundamentals.

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