Entering 2025, many investors were facing a very different set of risks. While tariffs have now — justifiably — taken center stage in many market watchers’ list of concerns, concentration risk still lingers. Yes, tech stocks have driven considerable gains for investors for years now. Last year, however, reliance on tech began to veer toward “over”-reliance. Rather than just wait to take that risk on the chin, however, investors and advisors may want to look at how an equal-weight ETF can help portfolios.
See more: Active Core Bond ETF SMTH Up Almost $1 Billion in AUM in Last Year
The ALPS Equal Sector Weight ETF (EQL ) charges a 25 basis point fee. The equal-weight ETF tracks the NYSE Select Sector Equal Weight Index. In doing so, the fund equally weights each sector of the U.S. economy via the use of a ETFs that capture whole sectors. For example, the fund holds the Consumer Staples Select Sector SPDR Fund (XLP ) to capture the consumer staples segment. By equally weighting those funds, the strategy crafts a balanced allocation to the broader economy.
That approach has helped EQL outperform the S&P 500 significantly YTD, per SS&C ALPs Advisors data. The fund returned 1.1% as of March 31 compared to a -4.27% for the S&P 500 Total Return index. Looking back further, the strategy has returned 13.1% since inception, going back to 2009.
So, what kind of role could a fund like that play in portfolios? While perhaps not best fit for a core allocation, an equal-weight ETF like EQL could intrigue in a satellite role. Where a core fund can look for that upside from tracking the market, a fund like EQL could do well if the market zigs rather than zags. Sitting at about half a billion dollars in AUM, the strategy could be a standout in an uncertain 2025.
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