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Intended vs Unintended Effects of Equal-Weighting Stocks

Betting against momentum?

Nicolas Rabener
10 min read
13 Apr 2026

SUMMARY

  • Equal-weighting beats market cap-weighting over the long term
  • However, there is no performance consistency
  • Comes with strong sector and factor biases

INTRODUCTION

In a previous research article, we showed that an equal-weighted portfolio of U.S. stocks would have outperformed its market-cap-weighted counterpart in eight of the ten decades since 1926 (read Equal versus Market Cap-Weighted Stock Market Indices). Yet despite this historical edge, market-cap-weighted products continue to dominate in assets under management.

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