The Invesco S&P 500® Equal Weight ETF (RSP) has seen over $3.2 billion in net inflows year-to-date as investors look to the benefits of equal weighting.
RSP is an ideal fit for investors looking to maintain broad exposure to the U.S. market since the fund weights each of the 500 holdings equally, around 0.20%. This results in exposure that is considerably more balanced than other alternatives, and a methodology that has often resulted in outperformance.
The S&P 500 EWI outperformed the S&P 500 by 0.8% in May, a continuation of the 2% outperformance demonstrated in April. Key performance contributors for equal weight in recent months were the underweight to technology and the overweight to energy, according to S&P Dow Jones Indices.
This momentum continued from a strong first quarter, in which the S&P 500 EWI outperformed the S&P 500 by 2% during the first three months of the year, according to the S&P Dow Jones Indices U.S. Equal Weight Sector Dashboard.
RSP, or the Invesco ESG S&P 500 Equal Weight ETF (RSPE), which integrates ESG criteria into the strategy, 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 demonstrated strong returns and a tilt toward smaller value companies, making both offerings uniquely attractive in the current environment.
With quarterly rebalances to maintain equal weightings, RSP’s methodology imposes a strict “buy low/sell high” discipline, trimming allocations to companies that have grown and increasing allocations to companies that have underperformed, according to Invesco.
Both RSP and RSPE charge a 20 basis point expense ratio, according to VettaFi.
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