A Fast Start for a new Equal-Weight ETF

There has been a flurry of new exchange traded funds coming to market in recent months, but one ETF that quietly debuted at the end of 2014 has rapidly gained a following among investors.

Less than two months after coming to market, the PowerShares Russell 1000 Equal Weight Portfolio (NYSEArca: EQAL) can lay claim to being one of the more successful ETFs to debut in 2014. Nearly $118 million, $117.7 million to be precise, in assets under management confirm as much.

To say EQAL’s asset growth has been impressive is an understatement. On Feb. 10, the ETF had $47 million in assets, but over the past month, investors have poured nearly $113 million into the rookie ETF, according to PowerShares data. Just four other other PowerShares ETFs have seen larger inflows over that period.

Several reasons explain EQAL’s quick success, including the ETF expanding on the popular equal-weight theme. Investors have poured billions of dollars into various equal-weight ETFs over the years, but there can be more to equal-weight ETFs than merely assigning the same allocation to each of the fund’s holdings.

The new ETF offers investors an evolved approach to the prosaic equal-weight ETFs that currently populate the market. EQAL tracks the Russell 1000 Equal Weight Index, which applies an equal weight to nine sectors and then assigns an equal weight to each security from those sectors. [New ETF, New way to Eqaul Weighting]

The methodology that backs EQAL’s underlying index also mandates that the share portion of a potential constituent in a notional $5 billion portfolio cannot exceed 5% of the company’s float, ensures liquidity and that the benchmark remains investable. [Looking at Alternatively-Weighted ETFs]