Equal-Weight S&P 500 ETFs to Consider as Big Tech Struggles
A major selloff in tech stocks this year could have investors seeking out equal-weight S&P 500 funds.


Equal-weight S&P 500 exchange-traded funds (ETFs) could be poised to have their day in the sun, and here's why.
A stunning selloff in Big Tech has the S&P 500 Index down by more than 17% so far in 2022 – on pace to close out its worst year since 2008. And this has ETFs based on the index becoming far less reliant on mega-cap stocks like Apple (AAPL) and Amazon.com (AMZN) that have lost massive amounts of market value this year, reducing their weightings in the S&P 500.
As one example, the iShares Core S&P 500 ETF (IVV) currently has 18.1% of its nearly $303 billion in net assets invested in five stocks: Apple, Amazon, Microsoft (MSFT), Alphabet (GOOGL) and Meta Platforms (META). That’s down from its high of more than 24% in September 2020.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
That's a good thing.
Estimates suggest that as much as $7 trillion was invested in S&P 500-linked ETFs and mutual funds at the end of 2021. Heading into 2023, buyers of these funds will get a more balanced portfolio than in recent years.
That's also a good thing.
Still, many of these index ETFs that assign weight based on market value still have outsized exposure to tech stocks. And with the Federal Reserve committed to keeping interest rates higher for longer in order to bring down inflation, the troubles Big Tech has seen this year could continue for the time being.
One solution for investors is to use equal-weight S&P 500 ETFs that don't play favorites.
The problem: There are only two U.S.-listed S&P 500 equal-weight fund options available to investors. And both are offered by Invesco.
The Invesco S&P 500 Equal Weight ETF (RSP) tracks the performance of the S&P 500 Equal Weight Index. Both the ETF and the index are rebalanced quarterly. Based on 503 holdings, each stock in the ETF is rebalanced to a weighting of 0.20% on the third Friday in March, June, September and December.
By looking at RSP's current holdings, you can tell that 304 are either flat or in positive territory since the last rebalancing in the third week of September, with the next rebalancing in December.
The top three sectors by weighting for RSP are industrials (14.8%), technology (14.7%), and financials (13.6%). In addition, five sectors have a weighting of 10% or higher.
By comparison, the market cap-weighted IVV's top three sectors by weighting are technology (26.5%), healthcare (14.9%), and financials (11.6%). All five of the tech stocks mentioned earlier are in the top 10. However, none are in RSP's top 10.
In terms of performance, the equal-weight S&P 500 ETF is down 12.3% year-to-date, 510 basis points better than the market cap-weighted one. (A basis point = 0.01%.)
The mutual fund version is the Invesco Equally-Weighted S&P 500 Fund (VADAX). It, too, tracks the performance of the S&P 500 Equal Weight Index, and has a similar number of holdings and rebalances four times a year.
The big difference is that the mutual fund has an expense ratio of 0.52% (or, $52 annually for every $10,000 invested), more than twice the RSP's 0.20% fee.
Other broad-market equal-weighted ETFs revolving around the S&P 500's 11 sectors include the Invesco S&P 500 Equal Weight Technology ETF (RYT), the Invesco S&P 500 Equal Weight Health Care ETF (RYH), Invesco S&P 500 Equal Weight Consumer Staples (RHS). There are similar ETFs for energy, financials, utilities, consumer discretionary, materials, industrials, real estate and communication services.
Lastly, if you want something less broad, Invesco offers the Invesco S&P 100 Equal Weight ETF (EQWL). It tracks the performance of the S&P 100 Index, a collection of 100 large-cap, blue-chip U.S. companies.
Instead of rebalancing each quarter to 0.20% per holding as RSP does, it rebalances to 1.0%. EQWL charges five basis points more in expense fees than RSP, but Morningstar gives it an overall five-star rating out of 1,153 funds.
As Big Tech struggles, RSP, VADAX, and the other Invesco offerings are worth considering in 2023 and beyond.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Will has written professionally for investment and finance publications in both the U.S. and Canada since 2004. A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he's a keen student of business history. Married and now living in Halifax, Nova Scotia, he's also got an interest in equity and debt crowdfunding.
-
RMD Deadline April 1: Five Tax Strategies to Manage Your 2025 Income
Taxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
By Kelley R. Taylor Published
-
Rising AI Demand Stokes Undersea Investments
The Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
By John Miley Published
-
Microsoft Stock: Innovation Spurs Its 100,000% Return
Microsoft's ability to recognize the "next big thing" has allowed sales – and its share price – to grow exponentially over the years.
By Louis Navellier Published
-
Stock Market Today: Dow Sinks 715 Points as Inflation Unrest Grows
Inflation worries are showing up in both hard and soft data.
By Karee Venema Published
-
Stock Market Today: It's Going to Stay Choppy for Stocks
Auto-focus can show us a lot about uncertainty on the ground and in the stock market.
By David Dittman Published
-
Stock Market Today: Auto Tariffs Send Stocks Lower
The main indexes snapped their win streaks after the White House confirmed President Trump will talk about auto tariffs after the close.
By Karee Venema Published
-
Stock Market Today: Stocks Seesaw After Big Market Rally
The latest consumer confidence data showed sentiment remains low.
By Karee Venema Published
-
Stock Market Today: Markets Celebrate Trump's Tariff Détente
Consumer discretionary stocks led 10 of the 11 S&P 500 sector groups well into the green.
By David Dittman Published
-
Stock Market Today: Stocks Swing Higher After Early Slump
Negative earnings reactions for Nike, FedEx and Micron kept pressure on the main indexes, though.
By Karee Venema Published
-
Stock Market Today: Stocks Struggle After Big Fed Gains
An unexpected rise in existing home sales couldn't save stocks on Thursday.
By Karee Venema Published