For example, the Guggenheim S&P 500 Equal Weight ETF (NYSEArca: RSP) equally weights S&P 500 components, which also makes the fund lean toward smaller stocks. The equal weight strategy has also helped RSP outperform SPY by over 6% this year.
The PowerShares S&P International Developed Low Volatility Portfolio (NYSEArca: IDLV) or the iShares MSCI U.S. Minimum Volatility ETF (NYSEArca: USMV) also track broad markets, but they select components that show low volatility. Low-volatility funds hold up better in a market correction, but the strategy could underperform during rallies.
The iShares Select Dividend ETF (NYSEArca: DVY) and the First Trust Nasdaq Technology Dividend Index (NYSEArca: TDIV) screen for dividend-paying stocks with high yields. Dividends can help investors generate greater total returns over the long-term.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own SPY and EFA.