Concept
RITIX is a personal research prototype that explores how a diversified, rules-based equity index might be constructed for the Russian information-technology sector listed on the Moscow Exchange.
The defining choice is the weighting scheme: instead of weighting by free-float market capitalisation directly, weights are proportional to the square root of free-float market capitalisation. This moderates concentration in the largest names without going as far as equal weighting, and keeps the basket diversified across the ten constituent issuers.
The index is rebalanced quarterly.
Scope
Constituents are Russian IT issuers on the Moscow Exchange across the domestic technology stack — internet, software, infrastructure, and adjacent services. A liquidity and free-float floor is applied so that the resulting basket is investable in principle, though no actual investment vehicle exists or is planned.
Why square-root weighting
Cap-weighting concentrates a sector index in its largest names — a single mega-cap can dominate the basket and the index essentially tracks that one stock. Equal weighting goes to the opposite extreme, over-rewarding small and illiquid names. Square-root weighting sits between the two, and is one of the more widely studied alternative weighting schemes in the academic literature on factor-based and “smart-beta” index design.
RITIX is a research prototype, not an investment product — see full disclaimer below.