The Invesco S&P 500® Equal Weight ETF (RSP) saw substantial November flows as investors look to capitalize on equal weight’s significant outperformance over the S&P 500 this year.
RSP’s underlying index, the S&P 500 Equal Weight Index, gained 6.7% in November compared to the S&P 500’s advance of 5.6%. While equal weight has consistently outperformed this year, the gap between equal weight and the S&P 500 in November was in the top quintile of historical experience, according to S&P Dow Jones Indices.
RSP took in $1.4 billion in November flows, ending the month with $33 billion in assets under management, according to ETF Database. The fund has taken in $5.1 billion year to date as of November 2, making it Invesco’s most popular ETF in 2022, as measured by year-to-date flows.
The S&P 500 Equal Weight Index includes all constituents in the S&P 500, giving them equal weights at each quarterly rebalance. Equal weight’s methodology of selling relative winners and buying relative losers adds factor tilts to a portfolio.
As of the end of the third quarter, the equal weight has a tilt towards small size (47.8%), value (33.4%), and dividend (15.6%) compared to the S&P 500. It also has a tilt away from quality (-23.7%), low volatility (-6.0%), high beta (-4.5%), and momentum (-3.1%), according to S&P Dow Jones Indexes.
RSP’s underlying index’s value and small size factor tilts have led the equal weight methodology to outperform and mitigate losses in the current environment. Year to date as of November 2, RSP is down -7.2% while the S&P 500 has declined -13.3%, each on a total return basis, according to YCharts.
The Invesco ESG S&P 500 Equal Weight ETF (RSPE) offers the same methodology and exposure as RSP but screens for ESG criteria.
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