equal weight is a type of proportional measuring method that gives the same importance to each stock in a portfolio index or index fund so stocks of the smallest companies are given equal statistical significance or weight to the largest companies when it comes to evaluating the overall group s performance 
an equal weight index is also known as an unweighted index understanding equal weightequal weight differs from the method more commonly used by indexes funds and portfolios in which stocks are weighted based on their market capitalization many of the largest and most well known market indices are either market capitalization weighted or price weighted market cap weighted indices such as the standard poor s s p 500 give greater weight to the biggest companies according to market capitalization large caps such as apple and microsoft are among the biggest holdings in the s p 500 price weighted indices such as the dow jones industrial average djia give larger weightings to stocks with higher stock prices the concept of equally weighted portfolios has gained interest due to the historical performance of small cap stocks and the emergence of several exchange traded funds etfs standard poor s has developed more than 80 different equal weight indices based on combinations of market cap market and sector in the dow spdr dow jones industrial average etf trust dia an exchange traded fund that tracks the djia the largest holdings as of september 2021 are united healthgroup goldman sachs and the home depot 1performance of equal weighted indicessmall cap stocks are generally considered to be higher risk higher potential return investments compared to large caps in theory giving greater weight to the smaller names of the s p 500 in an equal weight portfolio should increase the return potential of the portfolio historically this has been the case in the short term from september 2020 to september 2021 the total one year return for the s p 500 equal weight index ewi was 41 93 vs 33 72 for the traditional s p 500 index 2however over the long term the gap narrows and in fact the returns flip the 10 year annualized total return september 2019 september 2021 for the s p 500 equal weight index was 15 32 but the s p 500 outperformed it returning 16 32 2s p global the parent company of standard poor s developed the s p 500 equal weight index in january 2003 an equal weight version of the popular s p 500 index as the name suggests although both indexes are comprised of the same stocks the different weighting schemes result in two indexes with different properties and different benefits for investors examples of equal weight fundsinvesco offers more than a dozen different equal weight funds covering not only major indices such as the s p 500 but also many of the market s major sectors the invesco s p 500 equal weight etf rsp for example provides the same exposure to the smallest companies in the s p 500 as it does to corporate giants such as general electric 3equal weight index funds tend to have higher portfolio turnover than market cap weighted index funds the fund manager has to periodically rebalance investment amounts so that each holding represents the same percentage amount of the total portfolio as a result they usually have higher trading costs and their trading prices can be more volatile than in regular index funds however equal weight etfs offer more protection if a large sector experiences a downturn other examples of equal weight index etfs include the invesco russell 1000 equal weight etf 4 which is based on the russell 1000 equal weight index and the first trust nasdaq 100 equal weighted index fund which uses the nasdaq 100 equal weighted index as its benchmark 5