Nifty 50 Equal Weight Vs Nifty 50: What 3-Year, 5-Year And 7-Year Returns Show

Equal weight funds follow a different approach by assigning the same weight to every stock in the index, allowing investors to participate more evenly across all constituents.

The Nifty 50 Equal Weight Index consists of the same 50 companies as the Nifty 50 but assigns an equal weight to each stock.

Source : IANS

Show Quick Read

Key points generated by AI, verified by newsroom

• Equal weight funds allocate same weight to all stocks.
• They recently outperformed traditional indices during certain periods.
• Funds offer diversification but expose investors to mid-cap risks.

Traditional market capitalisation-weighted indices give higher weight to companies with larger market values. As a result, a handful of heavyweight stocks can have a significant influence on overall index performance. Equal weight funds follow a different approach by assigning the same weight to every stock in the index, allowing investors to participate more evenly across all constituents. The Nifty 50 Equal Weight Index consists of the same 50 companies as the Nifty 50 but assigns an equal weight to each stock.

The index is periodically rebalanced to restore the equal allocation. This means each stock carries approximately 2 per cent weight, compared with the market capitalisation-weighted Nifty 50, where larger companies receive a higher allocation. This approach reduces dependence on a few large companies and provides broader exposure across the index. However, the equal allocation also means that smaller companies within the index receive a relatively higher representation than they would in a traditional market capitalisation-weighted index.

How Equal Weight Funds Have Performed

The recent performance of equal weight indices has attracted investor attention. The Nifty 50 declined about 5 per cent over the past 12 months and around 2 per cent over six months, while some equal weight categories delivered stronger returns over the same period. The Nifty 500 Equal Weight category delivered around 15 per cent returns over six months, while Nifty 100 Equal Weight funds delivered around 7 per cent and Nifty 50 Equal Weight funds gained about 2.7 per cent for the period ending September 2026.

The performance difference is largely linked to the way stocks are weighted. When a few large companies underperform while broader market participation improves, equal weight strategies can benefit because smaller constituents within the index have a greater allocation. Looking at longer-term rolling returns, the Nifty 500 Equal Weight Index recorded average rolling returns of 15.0 per cent over three years, 13.8 per cent over five years and 13.2 per cent over seven years. The Nifty 100 Equal Weight Index delivered 14.2 per cent, 13.3 per cent and 13.0 per cent, respectively.

The Nifty 50 Equal Weight Index recorded average rolling returns of 13.1 per cent over three years, 12.3 per cent over five years and 11.8 per cent over seven years. Nifty Top 20 Equal Weight delivered 13.2 per cent, 12.8 per cent and 12.7 per cent, while Nifty Top 15 Equal Weight delivered 13.6 per cent, 13.2 per cent and 13.1 per cent over the respective periods. Interestingly, the Nifty Top 10 Equal Weight Index recorded average rolling returns of 13.8 per cent over three years, 14.0 per cent over five years and 14.2 per cent over seven years. In comparison, the Nifty 50 delivered 12.3 per cent, 12.1 per cent and 12.1 per cent over the same periods.

Index 3-Year Average Rolling Return 5-Year Average Rolling Return 7-Year Average Rolling Return

Nifty 500 Equal Weight 15.0 per cent 13.8 per cent 13.2 per cent

Nifty 100 Equal Weight 14.2 per cent 13.3 per cent 13.0 per cent

Nifty 50 Equal Weight 13.1 per cent 12.3 per cent 11.8 per cent

Nifty Top 20 Equal Weight 13.2 per cent 12.8 per cent 12.7 per cent

Nifty Top 15 Equal Weight 13.6 per cent 13.2 per cent 13.1 per cent

Nifty Top 10 Equal Weight 13.8 per cent 14.0 per cent 14.2 per cent

Nifty 50 12.3 per cent 12.1 per cent 12.1 per cent

Why Equal Weight Funds May Work In Certain Market Conditions

Equal weight strategies tend to perform better when market participation is broad-based and mid-sized companies outperform large caps. During periods when a small number of heavyweight stocks drive the index higher, market capitalisation-weighted indices can perform better. The strategy also involves quarterly rebalancing, under which the weights of individual stocks are adjusted back towards the equal allocation. This helps maintain diversification across constituents but can also result in higher portfolio turnover compared with traditional Index Funds.

Risks And Factors To Consider

Equal weight funds are not designed to outperform in every market cycle. Since every stock receives the same allocation, companies with smaller market capitalisations within the index receive greater representation compared with their weight in a traditional market capitalisation-weighted index. This can increase exposure to Mid-Cap characteristics and changes in sector leadership. Investors should therefore consider whether the index composition and associated risk profile align with their investment objectives and risk appetite.

Equal Weight Funds As A Portfolio Allocation Option

Equal weight funds can serve as an alternative allocation strategy for investors seeking broader diversification within an index. By assigning similar weights to all constituents, they reduce concentration risk arising from a few large companies and provide more evenly distributed exposure across the index. However, the choice between market capitalisation-weighted funds and equal weight funds depends on factors such as investment horizon, risk preference and expectations about market leadership. Equal weight funds can be considered as part of a diversified portfolio rather than as a replacement for all index investments. 

(“Disclaimer: This article uses information originally published by Dalal Street Investment Journal (DSIJ). The views expressed are those of the original authors and not necessarily of ABP Network Pvt. Ltd. This content is provided for general informational and educational purposes only and should not be construed as investment, financial, legal or tax advice. Readers are advised to conduct their own research and/or consult a qualified financial advisor before making any investment decisions. This content is for informational purposes only and should not be treated as investment advice. ABP Network, its employees and associates shall not be responsible or liable for any losses or damages arising directly or indirectly from the use of or reliance on this article or any information contained herein.”)