This leads to the aforementioned overweighting of extreme events which occur with small probability, rather than to an overweighting of all small probability events.
Traditional indexes are generally based on market capitalization, which can result in overweighting stocks that are overvalued and underweighting stocks that are undervalued.
In 2016, an overweighting to credit and strong security selection, especially in financials, helped it to a 4.8% gain that edged out roughly 85% of its peers.
This can provide the operator with a positive control of depth, by remaining slightly negative and using the buoyancy of the float to support this slight overweighting.