Invesco's ETF Puts Rocket Fuel on the S&P 500

Core Insights - The S&P 500 is facing a concentration issue, with the top seven stocks representing about one-third of the index, leading to significant exposure to a few mega-cap technology companies [1] - The Invesco S&P 100 Equal Weight ETF (EQWL) offers an alternative by equally weighting the top 100 companies, limiting even large firms like Apple and Microsoft to approximately 1% of the portfolio [1] Performance Comparison - Since its inception in December 2006, EQWL has returned 271% over the past decade, outperforming the market-cap weighted SPDR S&P 500 ETF Trust (SPY) by 37 percentage points [2] - In the past year, EQWL gained 18.84%, compared to SPY's 17.34%, and has increased by 1.07% in early 2026, while SPY rose only 0.85% [2] Market Dynamics - Equal-weight strategies perform well when market leadership expands beyond mega-cap stocks, with early 2026 indicators suggesting a potential rotation, as evidenced by the iShares Russell 2000 ETF gaining 2.67% year-to-date compared to a modest 0.60% gain for the tech-heavy Invesco QQQ Trust [4] - Historical data indicates that equal-weight versions of the S&P 500 have outperformed market-cap weighted versions by an average of 1.05% annually over multi-decade periods [5] Rebalancing Strategy - EQWL employs a quarterly rebalancing strategy that systematically trims positions exceeding 1% and adds to those below 1%, facilitating a buy-low, sell-high mechanism [6] - The current sector allocation of EQWL includes Financials at 17.3%, Information Technology at 16.3%, and Healthcare at 15.2%, contrasting with market-cap weighted indices where Technology often exceeds 30% [7] Alternative Investment Options - The Invesco S&P 500 Equal Weight ETF (RSP) is another option that applies the same equal-weight methodology across all 500 companies, providing greater diversification into mid-cap names, although it has underperformed EQWL recently with a 13% gain over the past year [8] Future Outlook - Over the next 12 months, it is essential to monitor market breadth expansion and EQWL's quarterly rebalancing activity to assess the sustainability of its historical performance advantage [9]