Equal-weighted index - GetProfitable

In a 500-name equal-weighted index every company holds 0.2%. Since prices constantly move weights away from equality, the index must be rebalanced, typically quarterly, which means selling recent winners and buying laggards.

That rebalancing gives equal weighting a built-in tilt toward size-factor and a mild contrarian character. It also raises costs: turnover of 20% or more a year against roughly 3% for a cap-weighted version, plus market impact in the least liquid members.

Performance differences between equal and cap weighting are mostly explained by those tilts rather than by any special property of equality. Judge the version you hold against a benchmark with matching exposures, not against the cap-weighted headline index.