Tom and Brendan recently discussed equal and cap weighted indexes on the podcast. Through use of an analogy, they explained that the House of Representatives is like a cap weighted index and the Senate is like an equal weighted index. In today’s video you’ll learn that we can apply the cap and equal weighted lenses to help us examine different market sectors.
Tom discusses two different ETFs that track the S&P 500 technology sector in the video. One is cap weighted and the other equal weighted. You’ll see that while they’re made up of the same stocks, they’re weighted very differently. We hope today’s video helps to further your understanding of cap and equal weighted approaches.