VX1000 Fair Value Weighted™ Index is a non-market capitalization-weighted equity index that aims to deliver excess long-term risk adjusted returns versus conventional market cap-weighted indexes to very similar liquidity and investment capacity as market cap- weighted benchmarks.
The index introduces a new definition of “value” allowing investors to capture the valuation premium not only in small cap value stocks, but also importantly in large cap growth stocks. By allowing investors to capture a broader premium based on valuation, the VX1000 index enhances risk adjusted returns while providing for a solution to undue performance cyclicality inherent in traditional value and smart beta value indices.
The index provides for diversified exposure to U.S. large and mid-cap- stocks that exhibit higher fair value weights relative to the market and lower exposure to stocks that exhibit a market value that exceeds the fair value weight. Fair value is determined by discounting corporate earnings by fundamental value generating factors, such as profitability, earnings growth, earnings volatility and interest rates. The index comprises the thousand largest stocks, as measured by fundamental Fair Value Weighting™, within the S&P Composite 1500 Index and constitutes approximately 90% of the total market capitalization of all listed stocks in the U.S. equity market.
