Introduced in 2003, the S&P Equal Weight Index (S&P EWI) is the equal-weight version of the widely regarded S&P 500. The index comprises the same constituents as the capitalization weighted S&P 500, except that each company in the S&P EWI is allocated a fixed weight.
The S&P EWI is designed to meet the need for benchmarking, investing and trading strategies that require a size-neutral index compatible with the S&P 500. The S&P EWI provides an even spread of individual stocks and offers different sector exposures than the S&P 500.
The introduction of the S&P 500 Equal Weighted Index (EWI) pioneered the subsequent development of non-capitalization weighted indices. Since equal weighting is factor indifferent and randomizes factor mispricing, the S&P EWI index is an attractive option for proponents of the theory that the market is inefficient and at times misprices factors.
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