Equal weighting has an encouraging record as a design choice for earning a moderately higher premium in the stock market compared with the conventional weighting system of holding shares in proportion to their market-capitalization weight. A leading real-world example: the Guggenheim S&P 500 Equal Weight ETF (RSP) has earned a 7.9% annualized total return for the past 10 years through Oct. 10. That’s a handsome edge over a standard market-cap-weighted S&P fund: the SPDR S&P 500 (SPY) earned a moderately lower 7.0% over the same period, according to Morningstar.com. Does equal weighting also lift asset allocation results over a conventional portfolio design?
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