The 2025 stock market rally was heavily concentrated in mega-cap technology names, but market strategists expect a broader rally in 2026 as earnings growth expands beyond the largest companies. Investors looking to participate in this potential rotation are turning to strategies that provide balanced exposure across all market sectors.
The ALPS Equal Sector Weight ETF (EQL ) allocates approximately 9% to each of the 11 S&P 500 sectors, according to insights from SS&C ALPS Advisors. It meaningfully overweights sectors that have underperformed in recent years and may be positioned to benefit from market broadening. The strategy automatically rebalances quarterly to maintain equal sector weights.
Growth rates are expected to converge between technology and other sectors in 2026, according to Nationwide’s chief market strategist Mark Hackett, speaking to Reuters in late December. The valuation gap between technology and the rest of the market justifies repositioning into sectors that have lagged the recent rally.
Energy represented just 2.89% of the S&P 500 at year-end, while utilities accounted for only 2.35%, according to the insights. In EQL, both sectors receive approximately 9% allocations each, or more than triple their weights in the cap-weighted benchmark.
Power Demand Reshapes Energy Outlook
The investment case for energy and utilities has shifted beyond traditional defensive characteristics. Surging electricity demand from artificial intelligence data centers is creating new growth drivers for both sectors, according to the insights.
These infrastructure sectors may benefit from the multi-year buildout required to support AI computing needs. With energy and utilities at approximately 9% in EQL compared to less than 3% each in the S&P 500, the strategy provides substantially higher exposure to these sectors without requiring investors to select individual companies, according to the insights.
Real estate represents another underweighted sector in the cap-weighted S&P 500 at just 1.94%, according to the insights. EQL allocates approximately 9% to the sector through the Real Estate Select Sector SPDR ETF (XLRE ), positioning investors to benefit if a lower-rate environment supports property valuations.
The equal sector strategy has attracted growing investor interest, with EQL pulling in $22.08 million in net flows over the past month and $125.53 million over the past year, according to ETF Database. The fund now holds more than $589 million in assets.
EQL posted a 13.53% gain over one year, 15.63% annualized over three years, and 12.78% annualized over five years, according to ETF Database. The fund rebalances quarterly to maintain equal sector weights and carries a 0.27% expense ratio after contractual fee waivers through March 2026, according to the fund prospectus.
December’s market action offered a preview of potential sector rotation, with leadership broadening beyond technology as financials, materials, and industrials led the S&P 500, according to the insights. This type of rotation benefits strategies with balanced sector exposure rather than heavy concentration in 2025’s winners.
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