As a first step, a table of all traded companies can be compiled on the exchange's website. For example, Google Sheets allows you to insert a formula (=googlefinance([ticker],"marketcap") into a table that calculates the market cap of each company. Companies can then be sorted by their market capitalization and calculate their proportion in their index based on each company's capitalization (value ).If you don't particularly like a company, you can simply not include it in your index.
This is how, for example, an unadjusted index fund with the Top 10 most valuable companies on the Baltic Stock Exchange would look like. The smallest company, Coop Banka, would have a 3.9% share of the total portfolio, while the largest, Ignitis Group, would have 21.1%. To make it easier for other investors to build their portfolio, we also offer to get acquainted with the Google Sheets table we created, which allows you to familiarize yourself with the calculations made.
On the other hand, if your portfolio is based on market capitalization weights, it will not need to be balanced, as the weights will change automatically. Rebalancing in such a case will be relevant only if a company leaves the list of selected, for example, Top10 most valuable companies. In such a situation, it will be necessary to sell the "departure" and buy a share of another company. How often should the portfolio be rebalanced? We would recommend that this should be done at least once a year, but it is hardly worth returning to rebalancing more often than once a quarter. Alternatively, if the investor periodically makes additional investments in his portfolio, new investments should be made in such a way as to return to the selected portfolio weights.
Yes, although this process is not as simple as buying one index fund on the stock exchange, but if there are no good alternatives, then in our opinion, this is a purely feasible solution.