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Equal-weight ETFs outperform as leadership broadens beyond mega-cap stocks
Equal-weight funds cited include ROE, which has returned more than 22% year to date, and RSPT, which holds about 75 technology stocks.
MarketBeat Ratings highlights equal-weight exchange-traded funds as a way to reduce concentration risk versus standard market-cap-weighted indexes, where a small number of mega-cap companies can dominate performance.
The outlet says equal-weight ETFs can be particularly beneficial when market leadership broadens beyond mega-cap stocks. With health care and financials currently performing well, these funds have larger sector allocations than market-cap benchmarks, and they can also offer more exposure to smaller companies.
One example is the Astoria US Quality Kings ETF, ROE, which uses an active management approach and a sector-optimization screen across market segments. The fund holds roughly 100 positions, has an expense ratio of 0.49%, and paid a dividend yield of 0.96%, while returning more than 22% year to date.
Invesco’s S&P 500 Equal Weight Technology ETF, RSPT, applies an equal-weight approach in technology and holds about 75 stocks, mostly large caps. MarketBeat Ratings links its performance to the idea that investors can still participate in major technology winners while avoiding the heavier single-stock influence common in market-cap-weighted funds.
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