After a rough September for equities, investors are taking advantage of the opportunity to buy into growthier funds at a discount. Investors looking to reallocate funds to the space should consider the Invesco S&P 500 Equal Weight Technology ETF (RYT), which is based on the S&P 500 Equal Weight Information Technology Index.
RYT has taken in $20 million in one-week inflows and $23 million over four weeks as of October 6. As a risk-off sentiment emerged earlier this year, encouraging investors to pull out of tech, the fund has seen $278 million in outflows year to date, according to VettaFi.
The S&P 500 Equal Weight Information Technology Index covers the following industries: internet equipment, computers and peripherals, electronic equipment, office electronics and instruments, semiconductor equipment and products, diversified telecommunication services, and wireless telecommunication services.
RYT is different from other ETFs offering tech exposure because its underlying index utilizes an equal weight methodology, meaning that component companies receive equal allocations at each quarterly rebalance. This results in exposure that is considerably more balanced than other alternatives, and a methodology that some investors believe will add value over the long haul.
Equal weighting can provide diversification benefits and reduce concentration risk. This is particularly impactful in the technology sector as a small number of mega-cap funds can have an outsized impact on a market-cap weighted fund.
The fund comprises 77 securities, 89.23% of which are large-cap companies and 10.73% are mid-cap companies as of October 6.
RYT charges a 40 basis point expense ratio and has $1.9 billion in assets under management.
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