The ALPS Equal Sector Weight (NYSEArca: EQL) is getting a lower expense ratio. Denver-based ALPS said EQL’s new expense ratio will be 0.30% per year, down from 0.54%.
In addition, EQL received an Overall 4 Star Morningstar Rating as of February 28, 2015 against 34 of U.S. ETF Large Blend Funds based on risk adjusted returns, according to a statement issued by ALPS.
EQL applies equal weighting to the nine sector SPDR ETFs from State Street Global Advisors. The ETF debuted in July 2009 and had $144.6 million in assets under management as of March 31.
Weights for EQL’s holdings range from 10.88% for the Health Care Select Sector SPDR (NYSEArca: XLV) to 11.33% for the Energy Select Sector SPDR (NYSEArca: XLE).
“Although equal weighting of sectors can result in faster or slower earnings growth versus the S&P500 in any single year, profitability is similar on average. However equal-weighting aims to systematically avoid the excesses of the cap-weighted benchmark (such as the Financial crisis and the Tech bubble before that) making it ideal for “set-it-and-forget-it” investors who prefer somewhat less volatile returns,” said AltaVista Research in a recent research note. [All Sectors the Equal-Weight Way]