On the other hand, value-weighted indexes seek not only to avoid the losses due to the inefficiencies of market-cap weighting, but to add
performance by buying more of stocks when they are available at bargain prices. Value-weighted indexes are continually rebalanced to weight most heavily those stocks that are priced at the largest discount to various measures of value. Over time, these indexes can significantly outperform active managers, market cap-weighted indexes, equally-weighted indexes, and fundamentally-weighted indexes.
Annual return* of Value-Weighted Index over trailing 20 years: 16.1%