The Confusing Number of Value-Weighted Index Funds

I'm fascinated by this profile of Jonathan Steinberg and his Wisdom Tree ETFs. Instead of going overweight companies with the highest market capitalization, as most index funds do, Steinberg's funds go overweight companies with the highest dividends. Wisdom Tree's Jeremy Siegel explains:

By limiting exposure to both bubbles and panics, a value-weighted index can outperform domestic indexes by 1.25% annually, according to the back tests. Overseas, the outperformance will be double or triple that, predicts Siegel.

And competitor Eugene Fama thinks there's something to Steinberg's idea too:

Noted finance professor Eugene Fama argues WisdomTree has simply found a way of repackaging the "value premium," the well-established tendency of value stocks to outperform. Fama also believes in a value focus--he backs Dimensional Fund Advisors, which follows that creed and manages $154 billion in assets--except he thinks a better way to get value is to buy stocks with low price/book ratios.

What confuses me, however, is the way in which Wisdom Tree has launched no fewer than 39 different funds. There are six based on earnings, six based on dividends, ten based on different sectors, and an astonishing 17 based on different ways of slicing the international stock universe.

As an investor in index ETFs myself, I value simplicity greatly: it helps bring down the all-important expense ratio, and it means that I don't need to worry about which fund to pick - I just pick the broadest, simplest fund I can find. Walking through Wisdom Tree's virtual front door, I feel a bit like someone faced with 60 different types of toothbrush at the supermarket. And so I retreat to something cheaper and simpler elsewhere.