Invesco Equal Weight ETF Trails ALPS Equal Sector ETF’s 4.96% YTD Gain
The ALPS Equal Sector Weight ETF has gained 4.96% year-to-date, while the SPDR S&P 500 ETF is down 1.4% and Invesco’s Equal Weight ETF trails both over one year. EQL’s 9% cap on technology exposure underpinned its outperformance versus cap-weighted and equal-stock-weighted benchmarks, despite a 0.27% expense ratio.
1. Performance Comparison
The ALPS Equal Sector Weight ETF has delivered a 4.96% gain year-to-date, outpacing the SPDR S&P 500 ETF’s 1.4% decline. Over one year, both sector-weighted and cap-weighted benchmarks returned 17.4% while the equal-stock-weighted fund lagged.
2. Weighting Methodologies
The equal-sector ETF allocates roughly 9% to each of the 11 GICS sectors and rebalances quarterly, capping technology exposure near 9%. The equal-stock-weighted fund assigns identical weights to all 500 constituents, increasing its concentration in mega-cap tech names.
3. Outperformance Drivers
The technology cap shields the sector-weighted ETF from downturns in mega-cap stocks, enabling stronger performance when tech falters. This structure also boosts allocations to energy, utilities, and real estate relative to cap-weighted benchmarks.
4. Trade-Offs and Costs
The sector-weighted ETF’s 0.27% expense ratio exceeds cap-weighted alternatives, and its $667 million asset base can widen bid-ask spreads during volatility. The equal-stock-weighted fund also bears higher fees and similar liquidity constraints versus larger ETFs.