Equity Portfolio Management
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myriam2222
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- Jun 18, 2026
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I would say “if it is based…” not “given that it is based…” because it is not necessarily the case.
Well if you compare to a portfolio replicating an equal weight index, as not all stocks gain value in the same proportion in a given period, the portfolio is no longer equal weighted at the end of the period, so it is no longer a good replication of your index. You will have to rebalance it.
You don’t have this issue with value or float weighting as, if a stock value is increasing (or market cap) it will take a bigger share of your total portfolio but so does it in your index. So it is still replicating it properly and no need to rebalance
Well if you compare to a portfolio replicating an equal weight index, as not all stocks gain value in the same proportion in a given period, the portfolio is no longer equal weighted at the end of the period, so it is no longer a good replication of your index. You will have to rebalance it.
You don’t have this issue with value or float weighting as, if a stock value is increasing (or market cap) it will take a bigger share of your total portfolio but so does it in your index. So it is still replicating it properly and no need to rebalance
myriam2222
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- Jun 18, 2026
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Happy when i can help 
For a value/float weighted index, a fully replicated portfolio will be self-rebalancing. But if you invest in an equally weighted index, rebalancing costs could be high eg you invest $100 equally accross 10 stocks in the index, you will have to sell the stocks that increase value and buy more shares for stocks that have decreased value so that at each point you have equal value across the stocks.