Final answer:
Fundamental weighting is often associated with smart-beta indexes, which are different from market cap-weighted, equal-weighted, and dividend-weighted indexes. Smart-beta indexes aim to capture market inefficiencies in a rules-based and transparent manner.
Step-by-step explanation:
Fundamental weighting is a strategy used in constructing stock market indices. This approach involves rebalancing a portfolio so that it doesn’t become too tilted towards certain stocks or sectors that may become overvalued, thus maintaining a more stable and theoretically more reliable measure of a market's value or performance.
Regarding the question, fundamental weighting is a technique often associated with smart-beta indexes. These indexes are designed to capture investment factors or market inefficiencies in a rules-based and transparent way, which can potentially improve returns or minimize risk in comparison to traditional market cap-weighted indexes.
It is different from market cap-weighted indexes, such as S&P 500, where stocks are weighted according to their total market capitalization, and equal-weighted indexes, where each stock has an equal weight. Dividend-weighted indexes provide another alternative, where stocks are weighted based on their dividend yields.