"Equally weighted funds offer investors an opportunity to tilt their portfolio toward smaller companies rather than the few large companies that dominate most (cap-weighted) indexes, says Joshua Escalante Troesh, founder of Purposeful Strategic Partners in California.
"Considering that over a third of the money in an S&P 500 cap-weighted index is invested in the largest 25 companies, equally-weighted funds will also provide a little more diversification," he says.
. . .
"Smaller companies have historically performed better than larger companies, so an equally-weighted fund theoretically could perform better than a cap-weighted fund in the same index,"
Joshua Escalante Troesh is the President of Purposeful Strategic Partners and a tenured professor of Business at El Camino College. To explore working with him on your personal financial planning and investment advising needs, simply schedule a free Discover Meeting.