Little Monalisa2019-06-25 08:53:14

After an equal weighted index is constructed and the prices of constituent securities change, the index is no longer equally weighted. Therefore, maintaining equal weights requires frequent adjustments (rebalancing) to the index. Price-weighted indices are not rebalanced because the weight of each constituent security is determined by its price. For market-capitalization-weighted indices, rebalancing is less of a concern because the indices largely rebalance themselves.