Weighing In on Equal Weights

A lot of investors are uneasy about how much of the S&P 500 now sits in a handful of mega-cap names. Equal-weighting the index — holding every company in the same amount — is one increasingly popular answer. But is it actually an improvement?

This short Dimensional piece argues the instinct is reasonable while the tool is blunt: equal weighting forces constant rebalancing (more trading, more cost), can raise your tax bill, and deviates sharply from the market’s collective judgment. A worthwhile read on reducing concentration thoughtfully rather than mechanically.