In 2025, a select group of AI-focused tech stocks propelled the S&P 500 to an increase of over 16%, raising concerns about potential overexposure to this sector amidst fears of an AI bubble and geopolitical tensions, particularly in Iran. This situation has prompted investors to consider alternative strategies, such as exchange-traded funds (ETFs) with equal-weight approaches, which aim to minimize risk from concentrated holdings.
The Invesco S&P 500 Equal Weight ETF (NYSEARCA: RSP) recorded a nearly 1% decline in the week ending March 13, but remains up close to 1% year-to-date, outperforming the broader S&P 500. With an expense ratio of 0.2%, RSP offers lower risk by limiting any one stock to roughly 0.5% of its portfolio. The First Trust NASDAQ-100 Select Equal Weight ETF (NASDAQ: QQEW) employs a similar strategy, focusing on growth and quality, although it has underperformed the QQQ. This fund has an expense ratio of 0.55%, more than three times that of QQQ.
Additionally, the Invesco Russell 1000 Equal Weight ETF (NYSEARCA: EQAL) provides an equal-weight exposure to 1,000 stocks in the Russell 1000 Index for an annual fee of 0.2%. With a year-to-date return of nearly 5%, EQAL has surpassed the Russell 1000’s performance, appealing to investors targeting smaller companies without the heavy tech weighting typically associated with traditional Russell funds.
