Should you add equal-weight funds to your portfolio?
Risk check
Investors should also weigh concentration risk, said Pattabiraman. “Some of these portfolios—the narrower indices—can become concentrated. The question worth asking is whether a fund can manage so many stocks well once the asset size of the broader fund grows large. Investors should not just look at historical index performance, but at how these funds do in the live market,” he said—the impact costs, whether the fund manages tracking error well, and, for ETFs, whether it trades close to its indicative net asset value (iNAV).
