At the inaugural inside ETF (Exchange Traded Funds) conference three “heavy-weights” on index investing debated traditional versus alternative market cap weighted methodologies. At the core of the conversation lies the concern as to whether or not markets represented by cap weighted indexes are not efficient. Traditional cap-weighted indexes have a tendency to have overweight holdings in overvalued companies and underweight in undervalued companies according to Rob Arnott, chairman of Research Affiliates, and Jeremy Seigel, senior investment strategy advisor at Wisdomtree Investments. Gus Sauter, Chief Investment Officer at Vanguard maintained that Seigel and Arnott’s strategies could be accomplished at lower costs by allocating towards small cap and value with cap-weighted indexes covering those market areas. (Source: Financial Advisor Magazine, February 2008)