I agree that I too would like to see a study. 8)
Market Cap is disproportionately weighted when looked at across sectors. I think you misread my OP. I was in no way suggesting that a market cap based index fund was something other than just that. Rather, I was suggesting that there is the possibility of an alternate strategy to designing a Total Market Index Fund which is not based on market cap.
In terms of "active management" I complete agree that PersonalCapitals implementation of this strategy is by definition "active management". However, prior to the creation of a market cap based Total Index Fund, the same strategy would have been called active management. This is the reason I asked the question in the way that I did.
Perhaps another way of asking the question is whether people believe that market cap is the right design for Total Market exposure?
Here's the link I was referencing before:
https://www.personalcapital.com/pages/webapp/investing/smartYou can get to it on their site by logging in and going to: Advisor > Advisor > "Read our 8 Principles of Investing" Click Here > Smart
I've attached a copy of their visual representation of the Tactical Weighting strategy. As was mentioned in a previous thread on PersonalCapital, I don't agree with their comparison to the S&P 500 due to it's lack of Small Cap exposure (which they admit to in their literature), but you can still see the potential benefit. Here's what I think makes this approach interesting.
If you believe that sectors of the market have low or no correlation, then not taking that into consideration in your allocation is adding risk and lowering potential alpha. e.g. Tech stocks are overweighed but underperforming compared to utilities.
Reallocation across sectors is yet another opportunity to buy low and sell high.
Thoughts?