The S&P 500 Equal Weight Index outperformed the S&P 500 in October, building on equal weight’s trailing 12-month relative outperformance.
The S&P 500 EWI increased 9.80% in October, outperforming the S&P 500 by 2% during the month. Key performance contributors for equal weight last month were the underweight to the communication services and information technology sectors, according to recent commentary from S&P Dow Jones Indices.
Equal weight has outperformed in the first three quarters of this year, with equal weight’s trailing 12-month relative outperformance climbing to 5% as of the end of October. Year to date, the S&P 500 EWI has declined 12.91% compared to the 17.70% decline of the S&P 500.
Seven out of 11 equal-weight sectors outperformed their cap-weighted counterparts in October. The sectors in which the EWI trailed the S&P 500 were energy, trailing by 0.8%, industrials, trailing by 0.7%, financials, trailing by 1.4%, and materials, trailing by 0.8%.
Looking at the trailing 12-month performance of the equal-weighted and cap-weighted indexes, equal weighting has outperformed in the financials and materials sectors over the longer period.
Energy was the top-performing sector in October for both equal and cap-weighted and over the past 12 months.
Investors can gain exposure to the S&P 500 EWI with the Invesco S&P 500® Equal Weight ETF (RSP) or the Invesco ESG S&P 500 Equal Weight ETF (RSPE), which screens for ESG criteria. Equal-weighted strategies can provide diversification benefits and reduce concentration risk by weighting each constituent company equally so that a small group of companies does not have an outsized impact on the index.
The funds have also historically demonstrated strong returns and a tilt toward smaller, value companies, making both offerings uniquely attractive in the current environment.
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