The market capitalization is simply the product of the stock price by the number of shares outstanding. The Index includes all large-capitalization, mid-capitalization and small-capitalization securities that meet the Index requirements and is, in this sense, a total market index for the dividend-paying segment of the U.S. market.

The ETF employs an indexing investment approach to track the performance of the WisdomTree LargeCap Value Index. The WisdomTree Dividend Index measures the performance of U.S. companies that pay regular cash dividends on shares of their common stock and that meet specified requirements as of the Index measurement date.

Even the number of employees have been used in empirical studies on fundamental indexation. o Indices that operate on an index as a whole rather than on the individual stocks − these

All Rights Reserved To understand the idea behind a “fundamental index fund” you have to look under the hood to understand how a traditional index fund is designed.

Journal of Finance 47 (2): 427–465Campbell, J.Y., A.W. Available at SSRN: Lauricella, Tom. ect to play a role. September 21st, 2006.

1–11.Treynor, Jack L. 2005. The top 30% of companies with the highest value scores within the 1000 largest companies by market capitalization are included in the WisdomTree LargeCap Value Index. The indices also consider the shareholder base of each component.Since some companies own shares that are not fully available to the public, most of the indices use the free float factor to adjust calculations. July 21st, 2006.Bogle, John C. Malkiel, Burton G. “Turn on a Paradigm?” Wall Street Journal, Page A-14. The fundamental factors commonly used by fundamental index managers are sales, earnings, book value, cash flow and dividends. The Fund generally invests in all of the securities comprising its Underlying Index in proportion to their weightings in the Underlying Index. Price and value criteria are not included in this index. Fundamental indices are often contrasted to capitalization-weighted indices.

A fundamentally weighted index is constructed by calculating the economic size of each company within the index's universe, based on such factors as: revenues; cash flow; book value; and dividends. A leading global provider of benchmarks, analytics, and data solutions with multi-asset capabilities FTSE Russell’s expertise and products are used extensively by institutional and retail investors globally. The free float factor is used to include only the part of the company value that is not restricted or held by company insider.Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors.

The WisdomTree LargeCap Value Index is a fundamentally weighted index that measures the performance of large-cap value companies. For these purposes, "earnings" are determined using a company's reported net income, excluding special items, applicable to common shareholders. The WisdomTree LargeCap Value Index consists of U.S. companies that have positive cumulative earnings over the past four fiscal quarters and that meet The Index's market capitalization, liquidity, and other requirements as of the Index measurement date. The ETF generally uses a Representative Sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return and other characteristics closely resemble the risk, return and other characteristics of the Index as a whole. What is S&P 500 | S&P 500 explained | Value weighted index | FIN-Ed Welcome to financial education. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.

Performance and volatility fi gures for the cap-weighted, fundamentally weighted, and equal-weight- Fundamental indices are often contrasted to The traditional method of capitalization-weighting indices might by definition imply overweighting overvalued stocks and underweighting undervalued stocks, assuming a Weighting by fundamental factors avoids the pitfalls of equal weighting while still removing the claimed systematic inefficiency of capitalization weighting.If we assume that the capitalization-weighted market portfolio is not efficient, assuming a pricing inefficiency, capitalization-weighting might be sub-optimal and the degree of sub-performance might be proportional to the degree of random noise.Forty years of back-tested Indices weighted by any of several fundamental factors including sales, Financial economists — Walkshäusl and Lobe — investigate the performance of global and 50 country-specific (28 developed and 22 emerging) fundamentally weighted indices compared to capitalization-weighted indices between 1982 and 2008. Stocks with the largest market size within a market cap weighted index will typically have the greatest impact on performance and volatility whereas mid and small cap companies have less influence.

For example, the S&P500 index takes the 500 biggest US companies ordered by market capitalization and then average the market capitalization of these stocks (before averaging, the market capitalization is multiplied by the free float factor). "Value Weighted Index" is a term used to describe

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