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No. of Recommendations: 6
A huge negative of the equally weighted index is that they have to re-balance it every Quarter.
That drives portfolio turnover through the roof... so we have to subtract from our returns the
corresponding tax hit. We also have to subtract the slightly higher annual fee...
Obviously the turnover taxes are moot in a tax sheltered account. All else being equal I would
prefer the Equal Weight index but it’s not equal... we have a cost drag to consider.

All true, but in my view worth it.
Except in stretches that very large firms are ourperformers, equal weight products outperform equivalent cap weight products by a meaningful amount. And safer.
For most equal weight funds, the cost of the rebalancing is more than made up for by the extra profit from the rebalancing.
(rebalancing is, in and of itself, very slightly profitable, by trading short term noise.
Not a big number, but hey, it's something).
But more importantly, I'd consider QQQE a viable investment alternative and QQQ not.

As for tax due to churn...I guess.
But remember that your extra cost isn't the tax, but only the time value of the tax.
Most investments do ultimately get sold at some future date.
Sometimes the tax rate is lower in future, sometimes not.
First order effect is the return on the portfolio.
Second order effect is the churn on the portfolio.
Third order effect is the portion of that churn which is net realized profit above realized loss.
Fourth order effect is the tax on that net profit.
Fifth order effect is the time value of that tax.
I'm in an unusually lucky situation tax wise, but I suspect it's rare for a fifth order effect to be a determining factor in investment selection...

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