Rethinking Equal Weight: How RAFI Offers an Alternative
As equity market concentration hits historic levels, investors are actively seeking alternative index weighting strategies to mitigate idiosyncratic risk. For decades, the default option to escape the confines of market-capitalization concentration was to seek refuge in equal-weight strategies. By assigning a fixed, uniform weight to every index constituent, an equal-weight strategy decouples a company’s portfolio allocation from its market capitalization. That said, is an equal-weight strategy the only approach to reducing volatility? The RAFI Fundamental Index offers an alternative approach as discussed in Winning the Long Game with RAFI.
Source: https://etfdb.com/smart-beta-content-hub/rethinking-equal-weight/
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