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Core News Facts
The S&P 500 index is nearing an all-time high, having risen 33% since early April 2023, influenced by adjustments to U.S. President Donald Trump’s “reciprocal tariff” plan. However, the overall gains are largely driven by major technology firms; if evaluated equally across its 500 components, the index’s year-to-date gain would only be 7.5% as of September 24, 2023.
The Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP) offers a different investment approach, allocating equal weight to all components. This contrasts with traditional S&P 500 ETFs, where larger companies like Nvidia and Microsoft dominate performance due to their market cap. The equal-weight method could mitigate volatility, providing protection during downturns in significant stocks.
Since 1990, the Equal Weight index has outperformed the standard S&P 500 by nearly 500 percentage points. The expense ratio for this ETF is 0.20%, compared to 0.03% for the Vanguard S&P 500 ETF, which highlights its uniqueness in the market.
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