Realindex takes a different approach to the traditional method of indexing, which is largely based on the size or market capitalisation of companies.
Realindex on the other hand determines the weighting of a company in the portfolio by its sales, cash flow, book value and dividends.
"It's not often you come across a fresh approach to an age-old method, but the alternative to passive investing prescribed by Realindex is intriguing, while its cost-effectiveness makes it doubly attractive," Morningstar analyst John Valtwies said.
"The key attributes of passive investing still apply here, and the low turnover and low cost are big drawcards. The strategy was only launched in November 2008, so the performance track record to date isn't lengthy, but we'd expect underperformance in a risk rally like 2009 or a hard-running market."
