A frequent criticism of equal-weight ETFs is that when these funds do achieve outperformance of their cap-weighted peers, those added returns come by way of heavier allocations to small-cap stocks. In theory, that would mean an ETF like RYT is far more volatile than a rival like RYW. Three-year standard deviations paint a different picture. RYT’s three-year standard deviation of 13.2% is only modestly higher than the 12% found on IYW.
With the benefit of hindsight, that added volatility was a small price to pay for RYT three years ago. Over that time RYT is up 68% compared to a 53.3% gain for IYW. RYT hit a record high earlier Monday. [Getting Tactical With Sector ETFs]
Guggenheim S&P 500 Equal Weight Technology ETF
Tom Lydon’s clients own shares of Apple.