Why I prefer Total Stock index over other factor based index for my ETFs/Mutual funds

Well known passive indices, such as Total Stock market index, seem to outperform active funds by following one simple concept:

Follow the leaders in stock equities and allocate money proportional to how good they are doing.

One of the simplest measure of success for a company is it's market cap. Accordingly, most indices allocate money to top n (as measured by market cap) companies in proportion to their market cap.

Since industries (and it's associated leaders) change with time, it's pertinent to not get emotionally attached to any company. Investors tend to hang onto their losses from past leader holdings due to sunken cost fallacy. Similarly they tend to chase high flyers during boom times due to investor psychology called herd investing. 

An emotionless data driven index does not become victim to any of these investor psychology and keeps recalibrating itself as leaders become laggards and new leaders emerge.

There are several indices representing such total stock market. Typical allocation to large, mid and small cap stocks comes out to be 70%, 20% and 10% (based on their representation in total stock market based on market capitalization as articulated above).

My favorite total stock index is CRSP Total stock market index. It is a combined index of top 2500 stocks (based on market cap) representing almost 95% of the market cap of total stock market. Money invested in a given company is proportional to their market cap weight-age and so giant and large cap ones get most of money (70%) and rest goes to mid caps and small caps. Vanguard's Total Stock Market Index Fund VTSAX (also available as an ETF - VTI) is based on this index.

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