ALPS Equal Sector Weight ETF Gains 4.96% YTD Versus S&P 500’s 1.4% Loss, Caps Tech at 9%
EQL has gained 4.96% year-to-date through March 6 while the S&P 500’s cap-weighted ETF lost 1.4%, and EQL’s five-year return of 77.03% slightly exceeds the S&P 500’s 75.27%. By allocating roughly 9% to each of 11 sectors, EQL caps technology exposure compared with the S&P 500’s 34.4% tech concentration, reducing mega-cap risk.
1. Performance Comparison
EQL returned 4.96% year-to-date through March 6 while the cap-weighted S&P 500 ETF lost 1.4% and the Invesco S&P 500 Equal-Weight ETF trailed both. Over the past year both EQL and the cap-weighted S&P 500 ETF gained 17.4%, and EQL’s five-year total return of 77.03% edges the S&P 500’s 75.27%.
2. Sector Weighting Structure
The fund equally allocates roughly 9% to each of the 11 sector ETFs within the S&P 500, capping technology exposure versus the S&P 500’s roughly one-third weight in mega-cap tech. Quarterly rebalancing allows market-cap weighting within each sector, distinguishing this approach from equal-weight stock ETFs that treat all components identically.
3. Expense Ratio and Liquidity
EQL’s 0.27% expense ratio exceeds that of the cap-weighted S&P 500 ETF, and its $667 million asset base results in thinner liquidity, potentially widening bid-ask spreads during volatile market conditions. Structural diversification underperforms in prolonged sector momentum rallies, especially during sustained technology-driven upswings.