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, three is an on an oft-overlooked driver of returns to equal-weight ETFs: Rebalancing. 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]

Even with cap-weighted ETFs, the broad market ones, topping equal-weight ETFs this year, there are some equal-weight sector funds easily trumping their market-cap-weighted rivals. For example, the Guggenheim S&P Equal Weight Consumer Staples ETF (NYSEArca: RHS) and the Guggenheim S&P Equal Weight Healthcare ETF (NYSEArca: RYH) are easily topping the equivalent market cap-weighted equivalents this year.

However, cap-weighted consumer discretionary ETFs have been better thanks to large allocations to Amazon and Walt Disney (NYSE: DIS), among others.

Tom Lydon’s clients own shares of QQQ and RSP.