ALPS EQL Swaps SPDR ETFs for New VettaFi Index

• EQL is switching to the VettaFi Modelist Equal Weight Sector 500 Index on June 1. It is moving from sector SPDR ETFs to direct stock ownership.
• The VFES500 equally weights all 11 market sectors while ranking individual stocks within each sector by market capitalization.
• EQL has drawn $197.45 million in net inflows year to date and carries a 0.27% net expense ratio.

For investors in the fund, the change is more structural than strategic. EQL’s core goal of spreading exposure evenly across all 11 market sectors remains intact. However, the mechanics of how it gets there are shifting. According to ETF Database data, the $713 million fund has pulled in $197.45 million in net inflows year to date. This reflects strong investor interest in the equal-sector approach heading into the transition.

Since launching in July 2009, EQL has operated as an “ETF of ETFs,” holding all 11 active Select Sector SPDR ETFs in equal proportions to achieve broad, balanced market exposure, according to ALPS. Starting today, the fund will own individual stocks directly.

Behind the new benchmark is a partnership between ALPS and Modelist, a firm that uses the ALPS platform to build model portfolios for advisors. VettaFi administers the index while Modelist designed the methodology.

The VFES500 draws its stock universe from the VettaFi U.S. Equity Large-Cap 500 Index. Stocks are sorted into 11 sectors using Intercontinental Exchange (ICE) classifications. Each sector receives an equal weight, while individual stocks within each sector are ranked by float-adjusted market capitalization, meaning larger companies by available share count carry more weight within their sector, according to the methodology document.

As of May 28, the index held 497 constituents with an adjusted market capitalization of $59.43 trillion and a dividend yield of 1.61%, according to VettaFi.

Even with the equal-sector framework, mega-cap names still dominate within their buckets. Alphabet Inc. (GOOGL) carried the largest index weight at 5.74%, followed by Amazon.com Inc. (AMZN) at 3.95%, Exxon Mobil Corp. (XOM) at 2.47%, and Nvidia Corp. (NVDA) at 2.26%, according to VettaFi.

The VFES500 Total Return index posted a year-to-date gain of 10.7% and a one-year return of 23.6% as of May 28, according to VettaFi. EQL carries a net expense ratio of 0.27% and posted a year-to-date return of 9.9%, according to ETF Database data.

At current weights, Technology leads the index at 11.03% while Utilities sits at the low end at 8.24%, according to VettaFi. That narrow spread across sectors stands in sharp contrast to standard cap-weighted large-cap indexes, where Technology alone can hold a much larger share of the portfolio.

For more news, information, and analysis, visit the ETF Building Blocks Content Hub.