5 Questions For Herb Blank On Reverse Market-Cap Weighting

Define reverse market-cap indexing.

It's simply calculating the reciprocal of the float-weighted market capitalization (1/market cap) of every company in the index, then summing those reciprocals. Next, every stock's weight is derived by taking that same reciprocal and dividing it by the sum of those reciprocals.

What's the investment rationale for an equity index strategy that tracks reverse market-cap weights?

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