Investors seeking exposure to the U.S. stock market often turn to traditional S&P 500 index funds, which are weighted by market capitalization. However, this approach can lead to concentration risk, as a significant portion of the index’s value is concentrated in its largest holdings. As an alternative, investors might consider the Invesco S&P 500 Equal Weight ETF (RSP), which equally weights all stocks in the S&P 500 index, thereby reducing concentration risk. According to an interview with Nick Kalivas on MarketWatch.com, RSP has outperformed the SPDR S&P 500 ETF Trust (SPY) over three-year, 15-year, and 20-year periods, while SPY has outperformed over five and 10-year periods.
Kalivas also noted that smaller names in the S&P 500 have historically tended to outperform larger ones, a trend that is captured by RSP’s equal-weight strategy. Additionally, RSP’s quarterly rebalancing provides a value tilt to the portfolio. This information suggests that RSP offers a lower-risk approach to investing in the S&P 500 while still delivering competitive performance over the long term (MarketWatch).
