Why is there a difference between the equal and value weighted institutional holding of U.S. equities?
Equal institutional holding of US equities is the equal
allocation of capital on the equities in stock market irrespective
of the market capitalisation of the shares, or the number of
outstanding shares or price per share. This might not minimises
unsystematic risk as the ratios may not be equal to proportion of
stock market index.
Value Weighted holding of US equities is the holding the equities
in the proportion of the actual value of the outstanding shares of
equities as per the stock market index. The weights taken here are
market weights of stock. This minimises unsystematic risk.
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