How Does EQL Compare to SPY? | ETF Trends

The ALPS Equal Sector Weight ETF (EQL) offers unique exposure to the U.S. equity market.

EQL provides equal access to each sector, offering a more balanced approach than funds tracking the cap-weight S&P 500, such as the SPDR S&P 500 ETF Trust (SPY), and has the added benefit of avoiding the potentially adverse impact of rallies or crashes in specific sectors of the economy.

EQL outpaced the S&P 500 last year. The fund declined 10.7% in 2022, compared to the S&P 500 Index’s decline of -18.11% during the same period, each on a total return basis. Over three years ending January 3, EQL is up 27.8% compared to the S&P 500’s increase of 24.1%, according to YCharts.

EQL utilizes a fund-of-funds ETF structure, delivering exposure to the U.S. Large Cap Equity market by investing equal proportions in 11 Select Sector SPDRs. The fund, which rebalances quarterly, delivers moderate, yet meaningful exposure to every sector of the market.

The Select Sector SPDR ETFs are a set of products that divide the S&P into eleven index funds traded throughout the day on NYSE Arca.

In maintaining an equal-weight sector approach, compared to SPY, EQL underweights information technology, healthcare, consumer discretionary, and financials. EQL overweights energy, communication services, industrials, consumer staples, utilities, real estate, and materials.

EQL has been gaining in popularity over the past year, as the benefits of equal weight have been apparent in the current macro conditions. The fund has $304 million in assets and has taken in $45 million in year-to-date inflows, the most of ALPS’ ETFs.

The equal weight sector ETF charges an expense ratio of 27 basis points.

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