As fundamental indexing approaches it third anniversary and the fallout from the recent bear market comes to light, the debate about the indexing style continues. A Wall Street Journal article took a look Monday at how fundamental investment philosophies have fared in the recent markets.

Data from Morningstar showed that PowerShares FTSE RAFI US 1000 Portfolio had an edge over State Street Global Advisor 's traditionally weighted SPDR S&P 500 ETF , with the PowerShares fund averaging a negative return of 6.7% a year since its launch in 2005 as compared to a negative 7.1% for the SPDR fund.

WidsomTree's LargeCap Dividend Fund , however, fell short of the SPDR fund. The LargeCap fund averaged a negative 9.9% yearly return from its June 2006 launch through May 28, as compared to a 8.4% a year loss for the SPDR ETF. 

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