Equal-Weight ETFs Are Back in Style

Core Insights - The concentration risk in cap-weighted S&P 500 ETFs has raised concerns about their diversification, with the top five holdings accounting for 29% of these funds [1][4] - The ALPS Equal Sector Weight ETF (EQL) offers a solution by employing an equal-weight strategy at the sector level, providing a 9.41% weight to tech stocks compared to 35.29% in cap-weighted S&P 500 funds [2][5] - EQL is positioned as a complementary investment to traditional broad market funds, helping to mitigate concentration risk in the current market environment [3][6] Fund Overview - EQL has nearly $526 million in assets under management and has been operational for 16 years, demonstrating resilience across various market conditions [2] - The ETF tracks the NYSE Equal Sector Weight Index, equally weighting the 11 relevant sector SPDR ETFs, which minimizes turnover and results in a competitive expense ratio of 0.27% [5] - Investors may consider equal-weight funds like EQL to reduce exposure to large companies or to increase positions in smaller stocks within the index [6]