The structure of popular stock indices has long been argued to distort the reality of the markets. With the spread of passive investing, this question becomes more and more relevant, because now we can talk about more fundamental distortions.
It is enough to look at the last year’s performance of well-known indices such as the S&P 500 and the Nasdaq to immediately realize that they can reflect a very different picture. The classic and most common S&P 500 gained 23% last year, while the same index, but equally weighted, ended the year up 12%. The classic Nasdaq 100 is up 28% in 2024, while the equally weighted index is up just 9%.
Source: www.aripaev.ee
