Equal weight etfs vs Index etfs

SPDR® S&P 500® ETF (SPY) vs Rydex S&P Equal Weight ETF (NYSEARCA: RSP)


RSP – all the index constituents weighted equally

higher management fees (40 bps vs 10 bps)

SPY – market cap weighted (i.e. AAPL is over 3%, XOM 2.6%)

Dividend yield about 2% for both

Sector weightings are different

The difference in the performance of the equal weight Nasdaq etf vs the Nasdaq 100 etf is even more stark once the AAPL started to underperform the market. YTD the First Trust NASDAQ-100 Equal Weighted IndexSM Fund (QQEW) is outperforming the QQQ by close to 600 bps.

Over time the equal weight etf will outperform the index etf because of the large cap bias.