The Market Isn't Just 10 Stocks. Why Should Your Portfolio Be?
Cap-weighted indices have long been the standard, but their dominance is cracking. Traditional indices like the S&P 500 are top-heavy, leaving you exposed to the whims of a few giant companies. When the market turns, a dip in just a handful of stocks can drag your entire portfolio down with it.
“Equal-weight portfolios have tended to outperform market-cap-weighted portfolios over time.”
That’s where equal-weight strategies come in—a true game-changer. At iQUANT, all of our models are equal-weight. We spread the risk and give every stock a say, regardless of its size. This empowers smaller companies to drive long-term growth. It’s not just diversification; it’s a smarter way to think about returns.
Equal Weight = Bigger Gains
Over the last two decades, the S&P 500 Equal Weight Index posted a compound annual growth rate of 9.9%, compared to 8.6% from the traditional cap-weighted S&P 500. On a $100,000 investment, that difference adds up to an additional $147,000.
The S&P MidCap 400 Equal Weight Index has shown even more significant outperformance, highlighting the benefits of avoiding concentration in a smaller market segment.
With small-caps, the outperformance of equal-weighting is often most pronounced, as it gives fast-growing smaller companies a much larger voice than they would have in a cap-weighted index.
Don't let a few mega-stocks dictate your clients' returns. Equal-weighting offers a smarter, more balanced path to long-term growth. At iQUANT, we give you the tools to build portfolios that aren't just diversified—they're designed to outperform.