Fundamental indexing has received a fillip with the launch of a FTSE index that weights 200 Australian stocks according to the Research Affiliates methodology, which ignores price to focus on ‘fundamental’ factors such as book value, revenue and cash flow.

The head of business development for FTSE Australia, Julie Andrews, said Australian investors had been asking for a non-market cap weighted strategy for diversification in their domestic portfolios.

“The FTSE RAFI Australia 200 Index is a great example of what FTSE does best – collaboration with our partners and the local institutional investment community to deliver a much-needed new diversification tool,” Andrews said, referring to the period of investor consultation which preceded the new indices’ launch.

Andrews claimed the new indices offered a “smarter beta” while maintaining features of traditional indexing, including low turnover, low cost, transparency, high capacity and broad diversification.