Can Nifty 100 Equal Weight Index fund earn you more than Nifty 100 fund?

The Nifty 100 Equal Weight Index has had a strong run in the last six months, delivering 21.3 per cent against Nifty 100's 14.7 per cent as of June 30, 2024. Before we understand the equal weight index's reason for outperformance, let's understand what it is. Like the Nifty 100 Index, the Nifty 100 Equal Weight index is home to the top 100 large-cap companies. Each constituent is allocated a fixed equal weight when rebalancing. This means each company has a 1 per cent weight in the index. To maintain this fixed weight, the index purchases the relatively underperforming stocks and sells the winning stocks. Coming back to Nifty 100 Equal Weight Index's stellar six-month run, that is primarily due to stocks accounting for over 52 per cent of the index's weightage have delivered more than 20 per cent returns—doubly high compared to typical market returns of 10-12 per cent. Only 41 per cent of stocks in Nifty 100 could do the same. In fact, the equal weight (EW) index has outperformed Nifty 100 based on average five- and 10-year rolling returns in the last 10 years. Additionally, both indices show a standard deviation of 21 per cent over 20 years, indicating they both have similar levels of volatility. Historical performance Particular Nifty 100 (%) Nifty 100 Equal Weight (%) Average 5-year returns 12.9 13.4 Average 10-year returns 12.8 13.4 Standard deviation over 20 yea