“You may be reducing your exposure to giant megacaps, especially when they reach bubble territory, but you’re also dramatically increasing your exposure to small and midcap stocks, which tend to be more volatile,” says Samuel Lee, an ETF analyst at investment researcher Morningstar Inc. “There’s no free lunch.”
One last point of caution: the ETFs that use an equal-weight strategy tend to be more expensive than a traditional market-cap weighted fund.
Guggenheim S&P 500 Equal Weight
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own RSP and SPY.