Maybe not. Many so-called alternative indexes have gained credibility, and investors, in recent years and may offer new options for market participation and growth. Firms have been adding them at a brisk clip. This June post at etftrends.com describes new ETFs (stock-like exchange-traded funds) at S&P Dow Jones Indices, including funds that are geared for investors wanting low market volatility.
Traditional indexes like the S&P 500 give weight to individual stocks based on companies' market capitalizations -- the share price times the number of shares outstanding. The higher a company's market cap, the more that stock matters within the index. Despite their staying power, market-cap indexes have gained critics in recent years.
"Monkeys beat market-cap indices," proclaims the title of this 2013 study from the
Alternative indexes weight component stocks by any number of criteria. There are equal-weighted indexes such as the S&P EWI Consumer Staples, dividend-weighted indexes like the FTSE All-World High Dividend Yield Index, and social-responsibility indexes such as the Dow Jones Sustainability World Index Ex Tobacco, Alcohol & Gambling.
What about those "tobacco, alcohol, and gambling" stocks? Find them in their own indexes -- known as sin indexes or vice indexes, such as Standard & Poor's Casinos and Gaming index, or the ISE SINdex. The latter is an equal-weighted 30-stock index that includes horse racing (
Funds that invest in sin stocks include the focused Ladenburg Thalmann Gaming and Casino fund, and the more thoroughly evil-going
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