Market breadth is widening following a long run of dominance by the Magnificent Seven stocks. Market participants likely want to remain invested even as some technology segments are punished by artificial intelligence (AI) advancements. As such, some equal-weight strategies are flourishing to start 2026.
For example, the S&P 500® Equal Weight Index is up 5.79% year-to-date. It has already made more than a dozen record highs since the start of the year. The ALPS Equal Sector Weight ETF (EQL), which has a knack for beating that index over the long-term, is performing even better. It’s gained 6.61% since 2026 started. Signs of equal-weight’s resurgence have been perking up for months.
“Starting last fall, cyclical sectors of the U.S. economy turned higher, supported by the combination of looser monetary policy and more business-friendly fiscal measures—including provisions that allow companies to fully depreciate capital expenditures,” noted Nationwide’s Mark Hackett.
EQL Could Be Equal-Weight Leader
Assuming that cyclical rotation gains more momentum and equal-weight strategies continue trending higher, EQL may continue besting rival ETFs. It’s a prime case of methodology mattering.
Whereas many traditional equal-weight ETFs assign equal portions of their portfolios to individual stocks, EQL does that with the 11 sectors represented in the S&P 500. That allows the ALPS ETF to retain some of the upside potentially delivered by previous market leaders, including mega-cap tech names. EQL also remains pertinent today because some previously glossed over sectors are stepping up their respective games.
“The equal-weighted S&P 500’s string of new highs is encouraging, but the more notable story is the pro-cyclical rotation happening beneath the surface,” added Hackett. “Sectors long overshadowed by mega-cap technology—such as energy, industrials, and materials—are now outperforming tech year-to-date. Market breadth has strengthened, helping support the broader uptrend.”
Other factors, including improving profit margins for S&P 500 member firms outside of the communication services and technology sectors, also bode well for strategies such as EQL as 2026 moves forward.
“Profit-margin forecasts for the next 12 months within the equal-weighted S&P 500 have continued to strengthen, pointing to improving fundamentals beyond the index’s largest constituents. Taken together, these trends suggest a rotation supported not only by positioning but by strengthening pro-cyclical forces in the U.S. economy,” concluded Hackett.
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