S&P 500 Equal Weight Outperforms Cap Weight by 2% in Q2 | ETF Trends

The S&P 500 Equal Weight Index outperformed its cap-weighted counterpart during the second quarter, continuing equal weight’s trailing 12-month relative outperformance.

The S&P 500 EWI outperformed the S&P 500 by 2% during the second quarter. Key performance contributors for equal weight were the underweight to communication services and the overweight to utilities, according to S&P Dow Jones Indices.

This momentum is continuing 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 S&P Dow Jones Indices U.S. Equal Weight Sector Dashboard

Eight out of 11 equal-weight sectors outperformed their cap-weighted counterparts during the second quarter. The sectors in which the EWI trailed its cap-weighted counterpart were healthcare, energy, and real estate, which underperformed by 0.2%, 1.9%, and 2.1%, respectively.

Looking at the trailing 12-month performance of the equal-weighted and cap-weighted indexes, equal weighting the energy and real estate sectors has outperformed over the longer time period.

Over the past 12 months, the energy sector was the leader in both equal- and cap-weighted. Energy was the top-performing sector for both indexes in May.

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. 

For more news, information, and strategy, visit our Portfolio Strategies Channel.