2008 American Publishers Awards for Professional and Scholarly Excellence (The PROSE Awards) Finalist/Honorable mention, Business, Finance & Management. The Fundamental Index examines a new approach to indexing that can overcome the structural return drag created by traditional capitalization-based indexing strategies, and in so doing, enhance the performance of your portfolio. Throughout this book, Robert Arnott and his colleagues outline this breakthrough strategy and explain how it can be used to improve investment returns, typically at lower risk and lower cost than most conventional investments. 2008 American Publishers Awards for Professional and Scholarly Excellence (The PROSE Awards) Finalist/Honorable mention, Business, Finance & Management. In The Fundamental Index , the leading industry thinker, Rob Arnott and his colleagues, present a new indexing method that captures more return for equity investors. In this important new book, the authors explain how passive, market-capitalization-weighted index investing falls short and fails to serve investors by investing too much in overpriced stocks and too little in underpriced shares. In short, Arnott et al.’s innovative and straightforward strategy provides investors with a new tool for achieving excess returns in a projected low-return environment while preserving the many positive attributes of index fund investing.- Financial Markets and Portfolio Management "Rob Arnott and his colleagues have, in The Fundamental Index, produced one of the most controversial books in years in the investment world…Investment professionals would be very well advised to read it."- Financial Times "...one of the most controversial books in years...Investment professionals would be very well advised to read it." (Financial Times, September 15, 2008) Praise for the fundamental index "The Fundamental Index (R) method is a controversial financial innovation in the field of passive investing, but this book confronts the whole range of controversy head on. The case for use of the Fundamental Index method and against cap-weighted indexes is uncommonly lucid, well illustrated, and attention-grabbing. You cannot reach a judgment on the Fundamental Index strategy, pro or con, without reading The Fundamental Index." --Peter L. Bernstein, author of Capital Ideas Evolving "The Fundamental Index method is a financial innovation so logical that it is compelling to any and all who believe that common sense is a required ingredient for portfolio construction." --Bill Gross, Chief Investment Officer and founder of PIMCO "Rob Arnott's idea is both elegant and profound, yet some very smart people have trouble grasping his idea because of their unexamined assumptions about how the market works. This book will help the reader get past those assumptions." --Jack Treynor, President of Treynor Capital Management, Inc. "Rob Arnott is a financial pioneer and this volume is a welcome addition to the rapidly evolving debate surrounding the true nature of indexation and passive investing." --Andrew W. Lo, Harris & Harris Group Professor, Director, MIT Laboratory for Financial Engineering, MIT Sloan School of Management "Rob's research on the Fundamental Index approach was a major epiphany for me. He has turned conventional investing wisdom on its head. This idea is a BIG deal--it will be the fastest new investment idea to reach $100 billion in assets in history. Every investor needs to read this book." --John Mauldin, Millennium Wave Investments, author of Bull's Eye Investing and Just One Thing The Fundamental Index ® approach is a straightforward concept that weights companies in an indexed portfolio by their current economic scale, rather than by the value of their shares outstanding. In effect, this method shifts the frame of reference for investing from a market-centric view of the world―weighting companies according to how large the market thinks a company will become in the future, and prepays for today―to an economy-centric view―mirroring the current look of the economy. The authors demonstrate that this puts you in a better position to capture considerable profits along the way. Author Rob Arnott and his colleagues at his innovative investment firm, Research Affiliates, spent several years developing the Fundamental Index methodology. In just over three years, the idea has attracted over $20 billion of investment capital from some of the largest and most sophisticated institutional investors in the world. Now, with this book, Arnott and his coauthors Jason Hsu and John West explore the nuances of this approach, its historical roots, and its many practical applications. The Fundamental Index examines how this new twist on indexing can overcome the structural return drag created by traditional capitalization-based indexing strategies―which systematically overweight overpriced securities and underweight underpriced securities―and in so doing, enhance the performanc