Some strategists take the tactical approach a step further, opting for equal weight sector ETFs. Wilbanks, Smith & Thomas (WST) uses the Guggenheim equal weight sector ETFs in client portfolios. The benefit of that approach “is that it reduces exposure to the sectors’ prior best performers that might not be able to repeat its success and limits the mega-cap exposure, but naturally the performance and risk profile is different too,” according to S&P Capital IQ. [Equal Weight ETFs for Everyone]
At the end of 2013, WST held positions in the Guggenheim S&P Equal Weight Consumer Discretionary ETF (NYSEArca: RCD), Guggenheim S&P Equal Weight Technology ETF (NYSEArca: RYT) and the Guggenheim S&P Equal Weight Financial ETF (NYSEArca: RYF), all of which have outperformed their cap-weighted rivals this year. S&P Capital IQ rates RYF overweight and the other two funds marketweight.
Technology Select Sector SPDR