Jan 26, 2023Liked by Joachim Klement

Equal weighted indexes contain an embedded "buy low, sell high" strategy in their periodic rebalances, which contribute significantly.

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Joachim you say that :

"On the other hand, equal-weighted portfolios benefit from their higher allocation to highly profitable companies."

But why does an equal cap weighted set up mean a higher allocation to profitable companies? When the only consideration is putting the same amount of funds into all the stocks in a benchmark ?

What am I missing?

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If you like equal weight you'll love inverse weight (YPS)

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