S&P 500 Equal Weight TTM Outperformance Continues

The S&P 500 EWI underperformed the S&P 500 by 0.5% in July due to equal weight’s underweight to consumer discretionary. Seven out of 11 equal-weight sectors outperformed their cap-weighted counterparts during the month. The sectors in which cap-weighted outperformed include consumer discretionary, energy, financials, and utilities, according to S&P Dow Jones Indices.

The S&P 500 EWI is a size-neutral version of the S&P 500, weighting each constituent company equally so that a small group of companies does not have an outsized impact on the index — a methodology that paid off during the first half of the year, characterized by higher volatility and wide disparity among sectoral performance.

The S&P 500 EWI outperformed the S&P 500 by 2% during both the first and second quarters of 2022. Key performance contributors for equal weight were the underweight to communication services and the overweight to utilities.

Investors can gain exposure to the S&P 500 EWI with the Invesco S&P 500® Equal Weight ETF (RSP A-) or the Invesco ESG S&P 500 Equal Weight ETF (RSPE B), which screens for ESG criteria. Equal-weighted strategies can provide diversification benefits and reduce concentration risk by weighting each constituent company equally so that a small group of companies does not have an outsized impact on the index.

Information Technology was the top-performing equal-weight sector in July. Investors looking to augment their holdings with targeted exposure to the sector should consider the Invesco S&P 500 Equal Weight Technology ETF (RYT A-), which offers exposure to equities included in the S&P 500 Information Technology Index. This includes internet equipment, computers and peripherals, electronic equipment, office electronics and instruments, semiconductor equipment and products, diversified telecommunication services, and wireless telecommunication services, according to VettaFi.

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