What are the sorts of fundamental analysis done at the index level? What methods & metrics are used for determining the under/overvaluation of something like the S&P 500 index fund?
Do large institutional investors -- HF, HNW, endowments, etc -- do fundamental analysis of index funds they buy? Beyond simply deviance from NAV.
Most of what is called fundamental analysis is simply irrelevant for index funds.
Statistics are available for how well a fund tracks its selected index, and rating agencies express opinions (which may or may not be helpful) on comparative expected risk and return between funds in the same category. You can read each fund's prospectus for more insight into their general approach. And of course the fees are published.
But in an index fund you are investing in a very broad slice of the market. You generally can't, and don't want to, dive below that level into "fundamentals".
See other answers about investing in index funds. I buy one fund each of long-term, short-term, bond, reit, and international indexes, in a specific distribution. I maintain that distribution pretty much no matter what the market is doing, rebalancing as necessary. Near-zero effort, decent returns. I really don't look much deeper than that. Trying to time the market is a mug's game; you don't know when the top or bottom will be hit, so you rebalance to capture gains and trust that in the long term the model does what it's supposed to.
(Actually it's two funds of each type, since the ones I'm using inside my 401k aren't identical to the ones I'm using when investing directly. But I manage the mix as a single investment pool, maintaining the distribution that suits my risk tolerance and time horizon, as validated by my advisor's monte-carlo simulations.)
