ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -S&P 500 Equal Weight ETFs An equal-weighted index is just as it sounds. Every stock in the index has the same weight, regardless of how large or small the company is. Therefore, even Apple will have the same weight as the smallest company that is a constituent in the S&P 500.

Detailed explanation-2: -We’re here to help! An equal-weight index gives each constituent the same weight in the index, versus a market-cap-weighted or price-weighted index, where bigger companies (or those trading at higher prices) hold a larger share of the index.

Detailed explanation-3: -The idea is simple – an investor with an equally-weighted portfolio holds an equal dollar value across all the stocks that make up an index. This approach avoids concentrating too much of the weight into a few large stocks and gives more weight to stocks at the lower end of the market cap range.

Detailed explanation-4: -An equal-weighted index is a stock market index – comprised of a group of publicly traded companies – that invests an equal amount of money in the stock of each company that makes up the index. Thus, the performance of each company’s stock carries equal importance in determining the total value of the index.