Traders celebrate the S&P 500 index closing above the 7,000 level for the first time at the New York Stock Exchange on April 15, 2026.
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Equal weight ETFs are doing great. This investment approach is not new, but many large-cap stocks, which have driven a disproportionate share of core stocks, have been in the spotlight this year. Stock index performance In recent years, it has lagged behind. By allocating to an equal-weight ETF that gives the same share to all companies in the underlying index, rather than a market-weight ETF that reflects the core index itself, investors can maintain market exposure while addressing concerns about concentration risk.
Invesco S&P 500 Equal Weight ETF (RSP) is the oldest, largest, and most popular ETF using this approach, leading a much smaller group of about 30 equal-weight ETFs that invest in broad market indexes and more specific sectors. It has raised more than $12 billion this year, outperforming the market-weighted S&P 500 by about 3% year-to-date through Aug. 21, and has assets under management of more than $100 billion for the first time.
“All of a sudden people are paying attention,” said Cynthia Murphy, director of research at Bettafi, adding that equal weight strategies can be forgotten when markets are driven by very narrow themes, as they have been in recent years when the Magnificent Seven companies were making outsized profits.
The Mag 7 is a group of large U.S. technology and growth companies comprised of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla, which together make up about one-third of the S&P 500. As a bloc, these companies dominated the U.S. market for many years. However, recently, the group’s activities have cooled down as large capital investments related to AI have weighed on investor sentiment. Compared to the S&P 500’s 9.3% gain, the Mag 7 posted a flat performance in the first half of 2026.
Performance of the Equal Weight S&P 500 Index as measured by the RSP ETF and the Market Weight S&P 500 Index as measured by the IVV ETF in 2026.
“Investors are increasingly concerned about the concentration risk inherent in major indexes such as the S&P 500, where the top 10 stocks make up nearly 40% of the index. This exposure is particularly concentrated in AI themes and large hyperscalers, raising investors’ questions about whether inflated valuations and large capital expenditures are ultimately justified,” said Nathan Geraci, president of Novadius. “At the same time, market performance extends beyond the mega-cap names, with a wider range of sectors and market segments participating in the rally. … Equal weighting solves the problem of concentration risk and allows investors to participate more fully as market leadership continues to grow,” he added.
RSP and its peers still have a long way to go to catch up to the giant S&P 500 funds. All three largest ETFs — Vanguard S&P 500 ETF (VOO), iShares Core S&P 500 ETF (IVV) and State Street SPDR S&P 500 Trust (spy) – Between them they have nearly $3 trillion in assets, led by VOO’s roughly $1 trillion.
But more investors are turning to equal weight and smart beta strategies, Murphy said, both as short-term trades to take advantage of changes and as a long-term way to stay diversified across the broader market. “The market has been talking about the need for diversification from the Mag 7 for years, and we’re seeing the strategy in action. Mag 7 isn’t the only one. Others are catching up, and the other 493 stocks (in the S&P 500) have solid earnings growth, and the other 493 stocks have strong earnings forecasts. This supports equal weighting,” he said. “If the weight is the same, it’s always widely spread out. You’re betting on all the horses instead of picking the horse that actually wins.”
Geraci and Murphy said that while RSP is getting a lot of attention, there are more options in the equal-weight ETF bucket that tracks the S&P and other indexes outside of specific sectors.
Geraci pointed out that there are ample options available to meet investors’ specific wants and needs. For example, the Invesco Russell 1000 Equal Weight ETF (equal) is similar to RPS, but has a different index, the First Trust Nasdaq 100 Select Equal Weight ETF (QQEW) ProShares S&P 500 Dividend Aristocrats ETF (Noble) iShares MSCI USA Equal Weight ETF (european union) focuses on the large-cap and mid-cap stocks of the underlying MSCI index, the ALPS Equal Sector Weight ETF (EQL) tracks U.S. large-cap stocks by assigning equal weights across economic sectors while maintaining float-adjusted market capitalization weighting within each sector.
Mr. Murphy is a member of the Invesco S&P 500 Equal Weight Technology ETF (RSPT), which equalizes the weight of technology companies in the underlying index. ALPS Equal Sector Weight ETF
Invesco QQQ Equal Weight ETF (QEW), which focuses on large-cap U.S. stocks across all 11 World Industry Classification standard economic sectors. SPDR S&P Biotech ETF (XBI), which tracks an equal-weighted index of U.S. biotech stocks. The Invesco S&P 500 Equal Weight Materials ETF owns U.S. materials and natural resources companies included in the S&P 500.
“Investors concerned about the overrepresentation of major indexes are looking for other ways to gain exposure. Equal-weighted ETFs provide an obvious solution,” Geraci said. But he also added an entirely different option. “Historically, the equal-weighted S&P 500 index has performed much like mid-cap stocks. Some may argue that investors should simply increase their exposure to this category because lower-cost options are available.”
