Equal-Weight S&P ETF Outpaces SPDR S&P 500 ETF by 5% in Four-Month Streak
Through Feb. 26, the Invesco S&P 500 Equal Weight ETF has outperformed the SPDR S&P 500 ETF Trust by 5 percentage points year-to-date, marking the longest four-month outperformance streak since January 2023. Energy and materials ETFs have led gains while technology sectors lag, applying pressure on the cap-weighted SPY.
1. Sector Rotation Trends
At the start of 2026, energy and materials sectors have surged more than 27 percentage points ahead of technology over two months, reflecting a broad shift in investor preference away from high-multiple growth names. This intra-equity rotation contrasts with a cap-weighted benchmark approach, amplifying SPY’s exposure to mega-cap tech underperformance.
2. Equal-Weight vs Cap-Weight Dynamics
The Invesco S&P 500 Equal Weight ETF has outpaced the SPDR S&P 500 ETF Trust by 5 percentage points year-to-date, extending its lead for a fourth consecutive month—its longest such streak since January 2023. This gap underscores the growing divergence between equal-weight and cap-weight strategies as gains disperse beyond the largest constituents.
3. Implications for SPY Investors
SPDR S&P 500 ETF Trust holders face increased volatility risk driven by concentrated sector underperformance, particularly in technology and communication services. Investors may consider complementing SPY exposure with equal-weight or sector-specific ETFs to mitigate cap-weight concentration and capitalize on broader market participation.