Скачать или смотреть Equal Weight Index - Nifty 50 Equal Weight Index Fund

Equal Weight Index refers to a type of index with an alternative weighting strategy that equally distributes its holdings across all the securities within that particular index, as opposed to a conventional market capitalisation-weighted index.

An equal amount of money is allocated to each company within the index, irrespective of its market cap, while creating an equally-weighted index fund. For instance, if you invest Rs. 10 lakhs in a Nifty 50 Equal Weight Index Fund, you can say that Rs. 20000 is being invested in each of the 50 companies in an equal proportion.

Let us take the example of the Nifty 50 Equal Weight Index, along with its parent index Nifty 50, which has the same 50 stocks, yet the weightage of each of these stocks differs in both the indices. In the Nifty 50 Equal Weight Index, each of the 50 constituent stocks will have an equal weightage of 2%, resulting in better diversification and reduced concentration risk.

In a price-weighted index, the stocks that have the highest share price carry the most weight. In a market capitalization-weighted index, the stocks with the highest market cap carry the most weight. In an equal-weighted index, all the stocks carry the same weight.

Advantages of equal-weighted indices are that they are relatively more diversified than market cap-weighted indices, and they reduce the size bias due to lack of overweighting of large-cap companies.

Disadvantages of equal weight indices are that they have a higher portfolio turnover rate and higher transaction costs due to portfolio rebalancing to maintain equal weighting, and that underperforming stocks are given the same weight as that of outperforming stocks in the index.

Similar to the Nifty 50 Equal Weight Index, we also have the Nifty 100 Equal Weight Index where weights are fixed at 1% for each of the 100 companies at the time of rebalancing. Globally, we have the S&P 500 Equal Weight Index where weights are fixed at 0.2% for each of the 500 companies at the time of rebalancing.

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