Artificial Enhancements: Souped-Up Index Funds Get Trounced by Benchmarks

An enhanced index fund seems like a straightforward concept: Outpace an index without increasing the risk profile of the fund. Too bad it hasn't turned out to be the case.

A majority of enhanced index funds haven't beaten the indices that are their benchmarks since their inceptions. The problem: Most of the funds use quantitative models that point to attractive parts of the market. For the past few years, the stocks these models favor tend to be value and smaller companies, which haven't exactly shot the lights out relative to other sectors. ...