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Equal-weight ETFs can swap tech concentration for interest-rate sensitivity

Reported · Written up by our desk · Equities

MarketBeat Ratings highlights that rotating from a broad market exposure to an equal-weight approach is not automatically risk-reducing, because index construction can change the portfolio's macroeconomic sensitivity.

According to the outlet, strategies like the S&P 500 ETF Trust (SPY) can be dominated by mega-cap technology and tech-adjacent names, while equal-weight funds mechanically trade that concentration for heightened interest-rate sensitivity, leaving investors exposed to Treasury yield spikes and potential margin compression.

The article also notes that SPY holds about a 48% allocation to technology and tech-adjacent services, underscoring how the underlying holdings mix can drive different performance risks when monetary conditions shift.

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