Many investors opt to enhance their portfolio and remove size bias with an ETF that utilizes an equal weight methodology.
There are four ETFs in Invesco’s lineup of equal weight S&P 500 strategies that have taken in over $100 million in year-to-date inflows as of September 16, including the Invesco S&P 500® Equal Weight ETF (RSP), the Invesco S&P 500® Equal Weight Utilities ETF (RYU), the Invesco S&P 500® Equal Weight Consumer Staples ETF (RHS), and the Invesco S&P 500® Equal Weight Energy ETF (RYE)
RSP has taken in $3.3 billion in net inflows year to date, which is more than any other fund in Invesco’s ETF range, according to VettaFi.
RSP is based on the S&P 500 Equal Weight Index and Invesco ESG S&P 500 Equal Weight ETF (RSPE) is based on the S&P 500 Equal Weight ESG Leaders Select Index. RSPE’s underlying index is designed to measure the equal-weighted performance of securities included in the S&P 500 Equal Weight Index that also meet ESG criteria, while maintaining similar overall industry group weights as the S&P 500 Equal Weight Index, according to the firm.
RYU has taken in $224 million in year-to-date inflows. RYU offers exposure to equities included in the S&P 500 Utilities Index, which covers the following industries: electric utilities, gas utilities, multi-utilities and unregulated power and water utilities, telecommunication service companies, including fixed-line, cellular, wireless, high bandwidth, and fiber-optic cable networks.
RHS has seen $196 million in net inflows year to date. The fund offers exposure to the consumer staples sector of the U.S. economy, but with a unique twist: the fund tracks an equal-weighted index, meaning that component companies receive approximately equal allocations. That results in exposure that is considerably more balanced than other alternatives.
RYE has accreted $119 million in year-to-date inflows. The fund tracks an index that equally weights stocks in the energy sector of the S&P 500 Index. RYE has 23 equally weighted holdings with the top 10 holdings amounting to 49.10% of the fund as of September 15. Holdings include Occidental Petroleum Corporation (OXY), Targa Resources Corp (TRGP), ConocoPhillips (COP), Hess Corporation (HES), and ONEOK Inc (OKE).
An equal weighting methodology may be particularly appealing in the top-heavy energy industry, where traditional cap weighting can result in significant concentration issues.
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