Subject: Re: Berkshire or RSP
Out of curiosity do you not include EQAL i you equal weighted selections?

[First, I suggest you ask our esteemed web site host to change your handle to something other than your email address. Having your email address out there in public is really asking for trouble.]


EQAL probably has returns very similar to RSP so I don't see a big advantage for it.

But it has an oddity: it's not equally weighted. It is equally weighted by 11 sectors, then equally weighted by stock within each sector. So the weight by stock is inversely proportional to the number of stocks in that sector. Why place outsized bets on a company just because it's in a sector with few stocks--is that likely to be a better or worse business to be in? For example, each energy or utility company gets about 4.5 times the weight of each financial or industrial company because the Russell 1000 has few utilities and energy firms, but lots of industrial and financial firms. Maybe that's the result you want, but I'm not sure why.

If I were to weight companies differently based on what sector they're in, I'd probably weight them according to their sector's long run average ROE or long run returns, not how sparsely populated the sector was : )

Jim