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The answer, like many in finance, is "it depends". The most common distribution for equity ETFs is to follow an index that is tracking a market cap weighting of some slice of the market. There are equal weigthed benchmarks out there also and they will usually have that bit of information embedded in their title. There are also ETFs that we've dubbed quantitative-active ETFs that follow a predefined formula that sorts a broader market index based on value, growth and other factors. Many of those come from the Powershares and WisdomTree families, although both providers also do more basic indexes and other providers do quantitative-active funds.   

Morningstar ETF reports are available to premium subscribers. In these reports we tell you how the underlying index is constructed in the aptly named Portfolio Construction section of the report as well as our view on the best use and suitability of the fund and our fundamental take on the underlying equities in the index.

Scott Burns

Director of ETF Analysis Morningstar