Tapping into the Best-Known Equal-Weight ETF

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

This article is the first in a series exploring equal-weight ETFs.

After the market downturn last week, in which the S&P 500 fell 1.7% and the Dow lost 600 points, some investors are turning to equal-weight exchange-traded funds (ETFs) to cushion their portfolios against another downturn.

When an ETF’s portfolio is equally weighted, all companies or sectors in it are equally favored, regardless of market capitalization or size. This contrasts with a market-cap-weighted ETF, in which a specific sector or company can attain a disproportionate weight in the portfolio.

Thus, when setting a market-cap-weighted ETF and an equal-weight ETF with the same stocks in each portfolio side-by-side, we can see that those funds fill their holdings differently. One of the most famous equal-weight ETFs is one that my Successful Investing  and Intelligence Report readers will find familiar, as it has been a mainstay in our Growth and Tactical Trends Portfolios since November 2020: the Invesco S&P 500 Equal Weight ETF (NYSEARCA: RSP).

Not surprisingly given the ETF’s name, RSP takes all the stocks in the S&P 500 and weights them equally. As a result, many small-cap and mid-cap stocks that would be overshadowed in a market-cap-weighted portfolio get their chance to shine more brightly in an equal-weighted ETF. At the same time, since the portfolio does not favor a specific sector, the ETF is relatively well-cushioned from sector downturns.

Some of the fund’s holdings include Centene Corporation (NYSE: CNC), American Airlines Group, Inc. (NASDAQ: AAL), Incyte Corporation (NASDAQ: INCY), EOG Resources, Inc. (NYSE: EOG), Lumen Technologies, Inc. (NYSE: LUMN), Cabot Oil & Gas Corporation (NYSE: COG), Expedia Group, Inc. (NASDAQ: EXPE) and Diamondback Energy, Inc. (NASDAQ: FANG)

This fund’s performance has been relatively strong, even when including the damage done by the COVID-19 pandemic. As of Sept. 21, RSP has been down 2.07% over the past month and up 0.77% for the past three months. It currently is up 18.64% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $29.19 billion in assets under management and has an expense ratio of 0.20%. While RSP does provide an investor with a way to profit from an equally balanced portfolio, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE

previous article

Five supply chain stocks to buy for finding shelter from risks feature recommendations focused on strong-performing industrial stocks favored by BoA Global Research. The five supply chain stocks to buy amid delays for many industries to obtain the parts needed to manufacture goods to meet demand include two stocks that are executing their business plans particularly well, two others that that the investment firm described as


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Profits Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • Intelligence Report
  • Bullseye Stock Trader

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Technical Traders Alert
  • Success Trading Group


Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor