| Kippreport.com

Business of… investment tips

November 8, 2010 11:43 by Katherine Azmeh

Index fund investing — improved: Index funds are baskets of stocks, proportioned to track a piece of the broader market. It’s a simple way for investors to  buy shares in a fund whose performance will generally mirror that of some segment of the larger market. But one market expert suggests improving on the index fund idea by weighting stocks according to other indicators of their economic strength, like dividends pay outs, sales, and book values. His method is called fundamental indexing, and analysts say it tilts your portfolio toward stocks that offer good value. The pro: studies suggest that investing in value stocks may offer an edge, since value stocks have been shown to outperform growth stocks. The con: There’s no guarantee this trend will continue in the future.

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Tags: chasing performance, commodities, equities, fundamental indexes, index fund investing, index funds, leverage, lump sum investing, momentum investing, money magazine, savings, share prices, stocks, unconventional investment advice