There's a lot of talk these days about Equal Weight investing. But what is it, exactly?Put simply, equal weight is a type of proportional measuring method that gives the same importance to each stock in a portfolio, index, or index fund. In other words, if you have 10 stocks in your portfolio and they're all worth $1 million dollars apiece, then each stock will account for 10% of your total holdings.This approach has become increasingly popular in recent years as investors have sought to avoid the pitfalls of over-weighting certain stocks or sectors. By spreading their money around evenly among all their holdings, proponents of equal weight argue that investors can reduce risk and improve returns potential.Critics of equal weight investing often point to its lower liquidity as one potential drawback. And while it's true that an individual stock may be harder to sell when the overall market is down, proponents argue that over time this approach actually leads to better performance due to reduced volatility.
