Equal Weight ETFs: Hidden Upside in Today's Market

Core Viewpoint - Investors are encouraged to look beyond traditional benchmarks like the S&P 500 and Nasdaq-100 to identify real investment opportunities in the current market landscape [1][3]. Group 1: Market Analysis - The SPDR S&P 500 ETF Trust (SPY) has seen a significant concentration of its weight in a few technology stocks, particularly NVIDIA, which now holds the largest position in the fund [4][5]. - Over the past 12 months, SPY has outperformed the iShares Russell 2000 ETF by more than 10%, attributed to the ability of large tech companies to navigate high interest rates and inflation [6]. - The gap between SPY and the Invesco S&P 500 Equal Weight ETF (RSP) has widened to 17.5%, a level not seen since the 2008 financial crisis, indicating potential for a convergence [9][10]. Group 2: Investment Strategy - Historical trends suggest that the current 17.5% gap between SPY and RSP is likely to close, either through RSP outperforming or SPY pulling back [11]. - If RSP catches up to SPY, investors could see a potential gain of approximately 17.5%, while RSP is positioned to perform better in a downturn due to its diversified holdings [12]. - RSP offers a more balanced view of the U.S. economy, with no single stock exceeding 0.24% of the portfolio, contrasting with SPY's heavy tilt towards technology [13][14].