The ALPS Equal Sector Weight ETF (EQL) provides unique exposure to the U.S. equity market. 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. EQL, which rebalances quarterly, delivers moderate, yet meaningful exposure to every sector of the market, according to ALPS.
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, according to State Street.
EQL is designed to offer more balanced exposure than funds tracking the 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.
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.
The overweighting of defensive sectors has contributed to EQL’s outperformance this year: EQL’s underlying index has returned -18.20% year to date while the S&P 500 has returned -23.87% as of September 30. Over one year as of September 30, EQL’s underlying index has returned -9.45% and the S&P 500 has returned -15.47%.
EQL has been gaining in popularity this year, as the benefits of equal weight are highlighted in the current environment. EQL, which has $267 million in assets, has taken in $102 million in year-to-date inflows, the second most of ALPS’ ETFs, trailing only the Alerian MLP ETF (AMLP), which has taken in $510 million during the same period as of October 11, according to VettaFi.
EQL charges a net expense ratio of 28 basis points.
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