1. An equal weighted index is a stock market index which invests an equal amount of money in the stock of each company that makes up the index.
2. The performance of each company’s stock carries equal importance in determining the total value of the index.
3. There is no unjustified concentration on few stocks or particular sector.
4. The equal weighted index is more diversified and less risky.
5. Nifty 50 equal weight index is an example of an equal weight index.
(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
