Equal weight outperformance has continued into the final week of January, as the index maintains its lead over the parent S&P 500 year to date.
After outperforming the S&P 500 by 650 basis points in 2022, the S&P 500 Equal Weight Index — tracked by the — is off to a strong start again in 2023.
RSP has climbed 4.40% year to date through the end of last week, while the S&P 500 has increased 3.55% during the same period, each on a total return basis. Over a one-year period, RSP has declined 1.92%, while the S&P 500 has declined 8.17%.
RSP tracks the S&P 500 Equal Weight Index, which includes all constituents in the S&P 500 but gives them equal weights at each quarterly rebalance. The portfolio overlap, as measured by the percentage of index weights held in common, between the S&P 500 and equal weighting is 52% as of September 30, according to S&P Dow Jones Indexes.
The offers the same methodology as RSP but implements a screen for ESG criteria. RSPE is up 4.08% year to date as of January 20 and has declined 3.61% over a one-year period.
The equal weight methodology of selling relative winners and buying relative losers adds factor tilts to a portfolio. As of the end of the third quarter, the S&P 500 Equal Weight Index tilts towards small size (47.8%), value (33.4%), and dividend (15.6%) compared to the S&P 500, leading to the recent equal weight outperformance. It also has a tilt away from quality (-23.7%), low volatility (-6.0%), high beta (-4.5%), and momentum (-3.1%), according to S&P Dow Jones Indexes.
RSP and RSPE each charge a 20 basis point expense ratio.
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