Why Equal Weighted Index Funds Outperform Their Benchmarks

Have you heard of an equal weighted index fund? It's a unique fund that balances every holding equally.

We love index fund, and we've recommended several in our Guide To Investing. However, equal weighted index funds are gaining in popularity, and I think that has a lot of merit.

An equal weighted index fund is just like it sounds - everything inside the index fund is equally weighted. This differs from other index funds, in that most are capitalization-based, meaning stocks with higher market capitalization (or value) are held as a higher percentage of the fund.

Let's see how that really breaks down...