The ALPS Equal Sector Weight ETF (EQL) has been gaining in popularity in recent months as investors look to the benefits of a sector equal-weighting methodology.
EQL took in the greatest inflows across ALPS’ lineup of ETFs in August, taking in $74 million. The fund trailed either the ALPS Sector Dividend Dogs ETF (SDOG), the ALPS Emerging Sector Dividend Dogs ETF (EDOG), or the ALPS International Sector Dividend Dogs ETF (IDOG) in previous months, as investors opted to allocate to the issuer’s popular funds that apply the “Dogs of the Dow Theory” on a sector-by-sector basis, offering high dividend exposure.
As investor sentiment shifts again, EQL is now leading in flows over four-week, year-to-date, and one-year periods, in which the fund has taken in $71 million, $104 million, and $102 million, respectively, according to VettaFi.
EQL offers exposure to the domestic equity market but utilizes a unique methodology to access this asset class. Each sector of the economy receives equal weight in EQL, a strategy that results in a drastically different composition relative to market cap-weighted products such as the SPDR S&P 500 ETF Trust (SPY).
EQL is designed to offer more balanced exposure than its market cap-weighted peers and has the added benefit of avoiding the potentially adverse impact of rallies or crashes in specific sectors of the economy, according to VettaFi.
EQL uses a fund of funds approach and tracks the NYSE Equal Sector Weight Index, an index comprising all active Select Sector SPDR ETFs in an equal-weighted portfolio.
These are the Communication Services Select Sector SPDR Fund (XLC), the Consumer Discretionary Select Sector SPDR Fund (XLY), the Consumer Staples Select Sector SPDR Fund (XLP), the Materials Select Sector SPDR Fund (XLB), the Energy Select Sector SPDR Fund (XLE), the Technology Select Sector SPDR Fund (XLK), the Utilities Select Sector SPDR Fund (XLU), the Financial Select Sector SPDR Fund (XLF), the Industrial Select Sector SPDR Fund (XLI), the Health Care Select Sector SPDR Fund (XLV), and the Real Estate Select Sector SPDR Fund (XLRE).
EQL has a net expense ratio of 28 basis points.
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