ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Portfolio Strategies Channel
  2. Great Time to Consider Equal-Weight ETFs
Portfolio Strategies Channel
Share

Great Time to Consider Equal-Weight ETFs

Tom LydonFeb 10, 2022
2022-02-10

2022 is starting on a turbulent note for equities, but it may prove to be a good time for investors to consider equal-weight exchange traded funds.

ETFs such as the Invesco S&P 500® Equal Weight ETF (RSP A-), which is the largest fund in this category, minimize single stock risk. That’s a potential selling point for investors at a time when growth and technology stocks are weighing on the broader market.

“Indeed, the 29% monthly difference between the best- and worst-performing S&P 500® sectors in January 2022 was the highest since March 2020. Some market participants may be contemplating portfolio changes in response to recent drawdowns, but others may wish to consider the potential power of doing nothing,” says S&P Dow Jones Indices senior analyst Fei Wang.

As Weng notes, the S&P 500 Equal-Weight Index — RSP’s underlying benchmark — set a torrid pace for the three years ending 2021.

“By percentile ranking, the S&P 500 (95%), S&P 500 Equal Weight (97%), S&P 500 Materials (99%), S&P 500 Real Estate (100%), and S&P 500 Growth (96%) are all ranked above 95% percentile in their respective history,” Wang notes.

A similar phenomenon also applies to mid-cap stocks, which is one of the most overlooked segments of the equity market. Wang adds,  “the recent three-year performance for the S&P MidCap 400 and its related indices were also typically above their historical averages. The S&P MidCap 400 Industrials and Consumer Discretionary sectors posted particularly prominent returns relative to their respective historical returns, ranking in their 98% and 99% percentiles, respectively.”

Investors can access mid-cap stocks in equal-weight form with the Invesco S&P MidCap 400 Equal Weight ETF (EWMC B), EWMC follows the S&P MidCap 400 Equal Weight Index, which is the equal-weight counterpart to the cap-weighted S&P MidCap 400.

Similar trends were at play with the various S&P SmallCap 600 benchmarks.

“All but three indices posted above average three-year rolling total returns, with the Information Technology sector’s returns within touching distance of its maximum,” concludes Wang.

Investors looking to access small-cap stocks in equal-weight form can consider the Invesco S&P SmallCap 600 Equal Weight ETF (EWSC C+). That ETF follows the S&P SmallCap 600 Equal Weight Index.

Year-to-date, each of the three equal-weight ETFs mentioned are beating the comparable cap-weighted funds by healthy margins.

For more news, information, and strategy, visit the Portfolio Strategies Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X