Index investing has served investors well but Wharton finance professor Jeremy Siegel thinks it can be made even better. He proposes replacing the standard market capitalisation index with a "fundamental" index. However, not everyone agrees that this "new paradigm" will work.

Over the past three decades, index-style investing has moved from the fringes to the mainstream, notes Wharton school of business and financing. An estimated $US3 trillion is now committed to the strategy of matching broad market returns and giving up as little as possible to fees and taxes.

While indexing has served investors well and is here to stay, Siegel thinks i...