BALTIMORE (Stockpickr) -- While it's not uncommon to think of "the market" as a single unit, that hasn't always been the case. Even though stock market indices such as the S&P 500 and the Dow Jones Industrial Average have existed for decades, they were once more like sentiment indicators than the investible instruments that they are today.That all changed when Vanguard founder Jack Bogle came to the realization that few mutual fund managers beat the broad market in the long-term. To combat that, in 1975 Bogle created the Vanguard 500 Index Fund (VFINX), the world's first index fund. Unlike traditional actively managed funds, the Vanguard 500 didn't seek to select the best investments in the world -- instead, it exactly mirrored the well-known S&P 500 index. Although other fund managers thought that that index funds were a poor idea (the Vanguard 500 fund was originally referred to as "Bogle's Folly" and didn't initially raise enough capital even to buy all 500 of the S&P stocks), the result has been transformational to the investment world. Index funds are now one of the most prevalent mutual fund vehicles out there, and Bogle's once-mocked fund rings in as one of the biggest, with nearly $100 billion under management. Related: 3 Investments That Could Rally in 2011 But times have changed. In 2011, we live in a world where ETFs, active trading strategies and individual stock picking have all gained popularity -- and longer-term investors remain shell-shocked from 2008's broad market selloff. The question remains: Does it make sense to buy S&P index funds in 2011? Right now, I think that the answer is a resounding "yes" for a few reasons. Concentrated Exposure to Attractive Assets While index funds paint with broad strokes, right now index weightings are putting an emphasis on assets that look the most attractive right now. Unlike the price-weighted Dow, the S&P 500 is weighted by market capitalization. That means that larger companies make up a bigger portfolio concentration of the Vanguard 500 than smaller companies. That also means that a handful of dominant industries make up a larger part of the fund. Right now, energy and industrial materials firms make up nearly a quarter of the fund, an attractive setup given the continuing commodity rally that we're currently in the midst of. Economic rebound performers such as consumer goods and telecom make up another 17%.
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