Equal Weight ETFdb Portfolio Now Available
July 17, 2011 at 11:00 AM EDT
A new all-ETF model portfolio is now available to ETFdb Pro members; the Equal Weight ETFdb Portfolio offers an alternative investment style for investors who wish to steer clear from the potential pitfalls of the traditional market cap-weighted methodology. In a traditional market cap-weighted index, such as the S&P 500, each component stock is weighted according to its market capitalization (trading price multiplied by shares outstanding). Cap-weighted indexes determine the allocation given to each security based on the company’s market capitalization–and therefore the price of the stock–which can result in overweight allocations to overvalued companies and underweight allocations to undervalued stocks. The equal weight methodology has been gaining popularity as investors are realizing the potential for excess returns over traditional cap-weighted ETFs; over the last several years, many equal-weighted ETFs have outperformed their cap weighted counterparts–in some cases by a wide margin. In 2010 for example, SPY, which tracks the S&P [...] Click here to read the original article on ETFdb.com. Related Posts: RSP Just Keeps Plugging Along ETF Filings: Real Return, Equal Weighting, Mortgage REIT Funds On Tap Talking ETF Weighting Methodologies With Tony Davidow Rydex Launches Equal Weight ACWI ETF (EWAC) For ETF Investors, The Details Matter