What are the portfolio construction differences between equal-weighted and capitalization-weighted with regard to terms like reconstitution and rebalancing?
Reconstitution seems very straightforward. In any portfolio structure, reconstitution occurs based on your criteria and securities are removed or added to your portfolio.
My interpretation of rebalancing is not so good. Say you are looking at monthly returns, rebalance quarterly, and have two securities with weights $(0.2, 0.8)$. In each month, there will be market fluctuations and these initial weights will deviate. At the end of each month, would you maintain the $(0.2, 0.8)$ weights by selling off winners and buying losers? Or would you only do this at the rebalance period (let weights float until rebalancing)? If the portfolio is equal weighted with weights of $(0.5, 0.5)$, would you maintain the equal weights each month (by selling winners and buying losers) or only adjust at the rebalance period?