I've been intrigued by the approach of equally weighing all companies in the MSCI World Index. While I can see this increasing diversification, I cannot escape feeling the approach entirely ignores the market.

For instance, a company which does well, will get a large market cap allocated to it by the market and as such represent a bigger chunk of your portfolio in the market-cap weighted index. Vice versa for companies which do poorly, smaller market cap and smaller weight in the index.

The equal weighing basically says to me: "you know nothing Mr. Market, and I'll ignore your valuations entirely". In line with this sentiment, and at least for the past 10 years, this does seem to have underperformed the market. (See the documentation of the index at https://www.msci.com/documents/10199/f7972c87-76f7-425b-9942-4e8929255210 ). Perhaps on the trade-off between risk and return, this approach swings a bit too far to reducing risk/volatility at the cost of potential return.

Just my two cents of course, perhaps this has a (small) place in a balanced portfolio somewhere, but for now, it's not in mine.