Equal-Weight S&P 100 ETF Gains 1.5% While Cap-Weighted Fund Drops 2.9% YTD
Invesco S&P 100 Equal Weight ETF returned 281% over the past decade versus iShares S&P 100 cap-weighted fund’s 334%, with the equal‐weight strategy up 1.5% year-to-date while the cap-weighted fund is down 2.9%. Apple, Microsoft and Nvidia account for 28% of the cap-weighted fund’s portfolio, raising concentration risk.
1. Performance Comparison
Over the past decade, the equal-weight S&P 100 ETF returned 281% compared with 334% for the cap-weighted iShares S&P 100 ETF, but year-to-date this trend has reversed: the equal-weight fund is up 1.5% while the cap-weighted fund has fallen 2.9%.
2. Mega-Cap Concentration Risk
The cap-weighted fund’s top three holdings—Apple, Microsoft and Nvidia—represent 28% of its assets, exposing investors to sector concentration and amplifying downside when mega-cap technology stocks stumble.
3. Equal-Weight Rebalancing Mechanics
The equal-weight ETF assigns roughly 1% to each of the 100 S&P constituents at quarterly rebalance, systematically trimming positions that have run up and adding to laggards, which enforces a buy-low, sell-high discipline across all sectors.
4. Cost, Income and Diversification Tradeoffs
The equal-weight ETF carries a 0.25% expense ratio versus the cap-weighted fund’s 0.20%, but offers a 1.82% dividend yield compared with 0.86% and broader sector exposure, while the cap-weighted fund benefits from lower turnover and peak-tech rally participation.