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Is weighting ETFs by market cap the best way?

There is a lot of debate about this. People say that the problem with market-cap based indexes is that most of your money goes to the big firms. In other words, as you buy the S&P500, you don't buy the 500 firms equally.

You buy more of Facebook, Amazon, Netflix, Apple, Google etc. You don't buy many small and medium-sized firms.

Therefore, some firms, such as Dimensional Fund Advisers (DFA) claim they can outperform index-weighted ETFs and index funds long-term, by weighting towards small caps, which have historically outperformed.

The data so far is very inconclusive. It seems that sometimes DFA beats Vanguard's weighted ETFs, and sometimes Vanguard "wins". We will need to wait a few decades before the data is more conclusive.

For me, I doubt the likes of DFA will dramatically outperform Vanguard.
 
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