Sometimes it’s good to unfold out.
Case in level: Equal-weight funds are having a little bit of a second. By allocating property evenly, they keep away from excessive concentrations in a handful of shares. This yr, that has helped a couple of such funds mood the magnitude of losses that conventional giant cap index funds have seen. Invesco’s S&P 500 Equal Weight ETF (RSP), for instance, has returned -1.23%, in contrast with -5.13% for the S&P 500 Index. That agency final week added one other fund to its equal-weight suite: the Invesco QQQ Equal Weight ETF (QEW), which tracks the Nasdaq 100.
Although the agency has supplied the technique in funds domiciled elsewhere, “the opportunity had never arisen for us to launch a product here in the US,” mentioned Paul Schroeder, QQQ product strategist at Invesco. “It happened to be coincidental, where equal weighted [products] performed very well this year … It’s a pretty timely launch.”
Everyone Gets a Percent
With 100 constituent shares, every will get a 1% allocation in QEW. That can imply a better frequency of buying and selling to rebalance the portfolio than with market-cap weighted funds, though equal-weight funds can, as proven by their yr’s returns, outperform cap-weighted indexes. While the Nasdaq 100 is down about 5% thus far in 2026, the Nasdaq Equal Weight Index is down about 3.6%. “You’ve seen megacap growth taking a little bit of a breather,” Schroeder mentioned. “We’ve seen smaller companies outperforming so far year to date. You see value performing really well.”
Equal-weight funds have performed barely higher than indexes not too long ago:
- The iShares S&P 500 3% Capped ETF (TOPC), which launched final yr and has a most allocation to the most important constituent shares of three% every, has returned -3.8% yr thus far, in contrast with the S&P 500’s -5%.
- Invesco’s S&P 500 Equal Weight Technology ETF (RSPT) has been almost flat, whereas the S&P 500 Information Technology index is down about 8.5%. Invesco’s S&P 500 Equal Weight Energy ETF (RSPG) is up 31%, simply forward of the S&P 500 Energy’s 29% acquire.
- Meanwhile, Invesco’s Russell 1000 Equal Weight ETF (EQAL) is up 1%, in contrast with -5% for the Russell 1000.
Small is Beautiful: “Equal weighting introduces a tilt towards mid and smaller cap companies and tends to outperform when small caps are doing well,” mentioned Aniket Ullal, head of ETF analysis and analytics at CFRA Research. “An equal weighted QQQ would be a good choice for investors who want to stay invested in a tech-heavy ETF that holds all of the Mag 7, but is not too heavily weighted towards mega caps.”
