Can This Index Fund Beat the Market?

``Mr. Greenblatt's four new Formula Investing funds take a somewhat different approach, which he calls "value-weighted indexing." Essentially, the funds buy most heavily the stocks that look the cheapest based on fundamental measures such as yield and return on capital, a key measure of how good a company is at generating cash by investing in its business. "Instead of weighting by market cap, we're weighting by value," Mr. Greenblatt says. For the 20-year period ending on Dec. 31, 2010, Mr. Greenblatt says his methodology would have returned an average of 16.1% a year, compared to the annual average total return of 9.1% for the S&P 500, according to back-testing data. ''