While equal-weight ETFs have been more than legitimized over the years, some critics allege that the advantages of these products are solely tied to deeper exposure to small-caps and/or value stocks. However, Efficient rebalancing of equal-weight ETFs, either sector or broad market funds, not only drives returns, but also helps these ETFs steer clear of concentration risk. [How to Evaluate ETFs]
While the current bull market is older than its average predecessor, there are indications that more upside is in store for equities. Help could come from rising interest rates, a scenario that is often kind to the consumer discretionary, industrial and other cyclical sectors.
“The period before the Federal Reserve raises rates is historically a great time to invest. Over the past six tightening periods since 1980, the S&P 500 has returned 23.5 percent on average in the nine months prior to the first rate increase. Assuming the next tightening cycle begins at the Fed’s meeting in September, the nine-month period this time around began in mid-December. Since that time, the S&P 500 is already up more than 7 percent. Currently, a number of indicators, including my favorite, the New York Stock Exchange Cumulative Advance/Decline Line, show that the stock market is improving and can sustain its upward momentum,” said Guggenheim Global Investments Chief Investment Officer Scott Minerd in a note.
Guggenheim S&P 500 Pure Value ETF