For example, technology became 40% of the S&P before the crash. Financials were 24% of the S&P before the market went south.
The benefit of equal weighting, then, is that “you own enough of each sector that if any one goes on a run, you can participate. But you minimize the risk of it becoming too large and crashing,” Held says.
The equal weight strategy came out of the belief that sector risk is the biggest risk investors face these days, even more so than single stock picking. “We found out that it’s more important to avoid the wrong sectors and pick the right ones.”
EQL comes with a 0.55% expense ratio. You can read the full prospectus for the fund here.