It should be noted that liquidity for these funds can drop and the strategy emphasizes fragmented industries. For example, as financials recently rose in prominence, volatility also spiked. Additionally, one shouldn’t replace small-cap holdings for equal-weighting plays.
Another equal-weight play is the First Trust NASDAQ-100 Equal Weighted ETF (NasdaqGM: QQEW), which holds large-cap high-tech stocks that have good liquidity.
For more information on equal-weight strategy, visit our equal-weight ETFs category.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Max Chen contributed to this article.