According to reports from Dalal Street Investment Journal, equal weight funds have demonstrated superior performance compared to traditional market capitalization-weighted indices over extended periods. The Nifty 50 Equal Weight Index recorded average rolling returns of 13.1% over three years, 12.3% over five years, and 11.8% over seven years, while the Nifty 50 delivered 12.3%, 12.1%, and 12.1% respectively over the same periods. The Nifty 500 Equal Weight Index delivered 15.0% returns over three years, 13.8% over five years, and 13.2% over seven years, significantly outperforming the broader market. The Nifty 100 Equal Weight Index delivered 14.2%, 13.3%, and 13.0% respectively, highlighting the consistent outperformance of equal weight strategies across different market capitalizations.
As reported by Dalal Street Investment Journal, recent performance data shows the Nifty 50 declined about 5% over the past 12 months and around 2% over six months, while some equal weight categories delivered stronger returns. The Nifty 500 Equal Weight category delivered around 15% returns over six months, while Nifty 100 Equal Weight funds delivered around 7% and Nifty 50 Equal Weight funds gained about 2.7% for the period ending September 2026. The performance difference is largely linked to the way stocks are weighted, with equal weight strategies benefiting when smaller constituents within the index have greater allocation during periods of broad-based market participation.
According to the analysis, equal weight funds follow a different approach by assigning the same weight to every stock in the index, allowing investors to participate more evenly across all constituents. The Nifty 50 Equal Weight Index consists of the same 50 companies as the Nifty 50 but assigns an equal weight to each stock, with each stock carrying approximately 2% weight compared with the market capitalization-weighted Nifty 50, where larger companies receive higher allocation. However, the equal allocation also means that smaller companies within the index receive relatively higher representation than in traditional market capitalization-weighted indices, potentially increasing exposure to mid-cap characteristics and changes in sector leadership.
As reported by Dalal Street Investment Journal, equal weight strategies tend to perform better when market participation is broad-based and mid-sized companies outperform large caps. The strategy involves quarterly rebalancing, under which the weights of individual stocks are adjusted back towards the equal allocation, helping maintain diversification across constituents but resulting in higher portfolio turnover compared with traditional index funds. Equal weight funds are not designed to outperform in every market cycle and can increase exposure to mid-cap characteristics, making them suitable as part of a diversified portfolio rather than a complete replacement for all index investments.
