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3 Reasons to Buy Invesco S&P 500 Equal Weight ETF Like There's No Tomorrow
The Motley Foolยท 2025-08-20 09:25
Group 1 - The Invesco S&P 500 Equal Weight ETF (RSP) offers a different investment approach compared to traditional S&P 500 index funds, emphasizing equal weighting which allows every stock to have the same impact on performance [1][5][14] - Historically, while the S&P 500 index has outperformed the Invesco ETF over the past decade, the Invesco ETF has shown better performance since its inception, outperforming the S&P 500 in both price-only performance and total return [4][14] - The Invesco ETF has a lower exposure to technology stocks, with only about 14% of its assets in this sector compared to approximately 34% in the S&P 500 index, reducing concentration risk associated with hot sectors [10][11][12] Group 2 - The valuation levels of the Invesco S&P 500 Equal Weight ETF are more attractive than those of the S&P 500 index, with a price-to-earnings (P/E) ratio of 19.3 compared to the S&P 500's 27.6, indicating a better position for potential growth when large tech stocks falter [8][9] - The S&P 500 index's top 10 holdings are heavily weighted in technology, accounting for nearly 39% of assets, while the Invesco ETF's top 10 holdings are diversified across various industries and only account for about 3% of its assets [12][10] - The equal weighting methodology of the Invesco ETF leads to increased diversification, which can mitigate the risks associated with market-cap weighted indices that tend to concentrate investments in a few large companies [5][14]