Sometimes it’s nice to spread out.
Case in point: Equal-weight funds are having a bit of a moment. By allocating assets evenly, they avoid high concentrations in a handful of stocks. This year, that has helped a few such funds temper the magnitude of losses that traditional large cap index funds have seen. Invesco’s S&P 500 Equal Weight ETF (RSP), for example, has returned -1.23%, compared with -5.13% for the S&P 500 Index. That firm last week added another fund to its equal-weight suite: the Invesco QQQ Equal Weight ETF (QEW), which tracks the Nasdaq 100.
Although the firm has offered the strategy in funds domiciled elsewhere, “the opportunity had never arisen for us to launch a product here in the US,” said Paul Schroeder, QQQ product strategist at Invesco. “It happened to be coincidental, where equal weighted [products] performed very well this year … It’s a pretty timely launch.”
Everyone Gets a Percent
With 100 constituent stocks, each gets a 1% allocation in QEW. That can mean a higher frequency of trading to rebalance the portfolio than with market-cap weighted funds, although equal-weight funds can, as shown by their year’s returns, outperform cap-weighted indexes. While the Nasdaq 100 is down about 5% so far in 2026, the Nasdaq Equal Weight Index is down about 3.6%. “You’ve seen megacap growth taking a little bit of a breather,” Schroeder said. “We’ve seen smaller companies outperforming so far year to date. You see value performing really well.”
Equal-weight funds have done slightly better than indexes recently:
- The iShares S&P 500 3% Capped ETF (TOPC), which launched last year and has a maximum allocation to the biggest constituent stocks of 3% each, has returned -3.8% year to date, compared with the S&P 500’s -5%.
- Invesco’s S&P 500 Equal Weight Technology ETF (RSPT) has been nearly flat, while the S&P 500 Information Technology index is down about 8.5%. Invesco’s S&P 500 Equal Weight Energy ETF (RSPG) is up 31%, just ahead of the S&P 500 Energy’s 29% gain.
- Meanwhile, Invesco’s Russell 1000 Equal Weight ETF (EQAL) is up 1%, compared with -5% for the Russell 1000.
Small is Beautiful: “Equal weighting introduces a tilt towards mid and smaller cap companies and tends to outperform when small caps are doing well,” said Aniket Ullal, head of ETF research and analytics at CFRA Research. “An equal weighted QQQ would be a good choice for investors who want to stay invested in a tech-heavy ETF that holds all of the Mag 7, but is not too heavily weighted towards mega caps.”
