Equal weight is a proportional measure that gives the same importance to each stock in a portfolio or index fund, regardless of a company's size.

SPDR Dow Jones Industrial Average ETF Trust (DIA)

First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)

Equal weight is a type of proportional measuring method that gives the same importance to each stock in a portfolio, index, or index fund. The concept of equally-weighted portfolios has gained interest due to the historical performance of small-cap stocks and the emergence of several exchange-traded funds (ETFs).
Equal-weighted index funds tend to have higher stock turnover than market-cap weighted index funds, and as a result, they usually have higher trading costs. Other examples of equal-weight index ETFs include the Invesco Russell 1000 Equal Weight ETF, which is based on the Russell 1000 Equal Weight Index, and the First Trust NASDAQ-100 Equal Weighted Index Fund, which uses the NASDAQ-100 Equal Weighted Index as its benchmark. Equal-weight index funds tend to have higher portfolio turnover than market-cap weighted index funds: The fund manager has to periodically rebalance investment amounts so that each holding represents the same percentage amount of the total portfolio. S&P Global (the parent company of Standard & Poor's) developed the S&P 500 Equal Weight Index in January 2003—an equal-weight version of the popular S&P 500 Index, as the name suggests.

Equal Weight

Tracking error tells the difference between the performance of a stock or mutual fund and its benchmark. 

Tracking error is the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the context of a hedge fund, mutual fund, or exchange-traded fund (ETF) that did not work as effectively as intended, creating an unexpected profit or loss.
Tracking error is reported as a standard deviation percentage difference, which reports the difference between the return an investor receives and that of the benchmark they were attempting to imitate.
Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark. Given a sequence of returns for an investment or portfolio and its benchmark, tracking error is calculated as follows:
> Tracking Error = Standard Deviation of (P - B)
Where P is portfolio return and B is benchmark return. The managers then construct a portfolio that uses the type of constituents of a benchmark (such as style, leverage, momentum, or market cap) to create a portfolio that will have a tracking error that closely adheres to the benchmark. However, it is possible for fund managers to overcome the negative impact of fund fees and outperform the underlying index by doing an above-average job of portfolio rebalancing, managing dividends or interest payments, or securities lending.

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Equal Weight

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