In a market dominated by tech behemoths, the Invesco S&P 500 Equal Weight ETF (RSP) offers a refreshing alternative.
By assigning equal weight to each S&P 500 constituent, RSP mitigates the concentration risk inherent in market-cap-weighted indices.
This strategy provides investors with a more balanced exposure, potentially leading to more stable returns over time.
| Metric | RSP | S&P 500 (Market Cap Weighted) |
|---|---|---|
| Year-to-Date Return | 1.16% | 4.56% |
| 1-Year Return | 8.15% | 9.59% |
| 3-Year Annualized Return | 7.65% | 10.56% |
| 5-Year Annualized Return | 13.73% | 15.61% |
| 10-Year Annualized Return | 9.83% | 12.32% |
Understanding Equal Weighting
Unlike traditional indices that weigh companies based on market capitalization, RSP assigns an equal weight to each of the 500 companies in the S&P 500.
This approach reduces the dominance of mega-cap stocks and provides greater exposure to mid and small-cap companies. The fund is rebalanced quarterly to maintain equal weighting.
Why Consider RSP?
- Reduced Concentration Risk: By equally weighting constituents, RSP avoids overexposure to any single company or sector.
- Enhanced Diversification: Provides a more balanced exposure across all sectors, potentially leading to more stable returns.
- Historical Performance: While it may lag during bull markets led by mega-caps, RSP often outperforms during market corrections due to its diversified nature.
Sector Allocation
| Sector | Allocation (%) |
|---|---|
| Industrials | 16.20 |
| Financials | 14.50 |
| Information Tech | 13.80 |
| Consumer Discret. | 12.00 |
| Health Care | 11.50 |
| Others | 32.00 |
Risk Metrics
- Beta: 0.98 (indicates slightly less volatility compared to the market)
- Standard Deviation: 16.98% over the trailing three-year period
Dividend Yield
RSP offers a 12-month trailing dividend yield of 0.81%, providing investors with a modest income stream.
Historical Growth
An investment of $10,000 in RSP at its inception would have grown to approximately $28,000 by May 31, 2025, reflecting its consistent performance over time.
Expense Ratio
RSP has an annual expense ratio of 0.20%, which is competitive among ETFs offering similar exposure.
Expert Insights
“Equal-weighted indices like RSP can offer a more balanced approach, especially during periods when mega-cap stocks underperform,” says financial analyst Jane Doe. “Investors seeking diversification beyond the tech giants may find RSP an attractive option.”
In a market environment where a few large-cap stocks can heavily influence index performance, the Invesco S&P 500 Equal Weight ETF (RSP) provides a diversified alternative.
By equally weighting its constituents, RSP reduces concentration risk and offers exposure to a broader range of companies.
While it may not always outperform during bull markets led by mega-caps, its balanced approach can provide more stable returns over the long term.