2024-05-25 06:37:53 ET
Summary
- Invesco S&P 100 Equal Weight ETF follows an equal-weight strategy and has higher trading expenses compared to market-weight funds.
- EQWL has lower exposure to the technology sector, and its equal-weight strategy will limit its ability to capture the benefits of growth in technology stocks.
- The technology sector is expected to be a strong performance driver in the future, suggesting that EQWL may underperform the S&P 500 and S&P 100 indices.
ETF Overview
Invesco S&P 100 Equal Weight ETF ( EQWL ) owns a portfolio of top 100 stocks that are included in the S&P 500 index. Instead of allocating stocks in its portfolio by market-capitalization, the fund implements an equal-weight strategy and has to rebalances its portfolio quarterly. This means that the fund incurs higher trading expenses than many other funds that follows market-weight strategy. EQWL has lower exposure to growth sectors such as technology sector. In addition, its equal-weight approach limits the fund to fully capture the benefits of growth in many technology stocks in its portfolio. Given that technology sector will likely be a strong performance driver of the S&P 500 and S&P 100 indices in the future, EQWL will likely underperform against these indices. Hence, we think investors should consider other alternatives instead....
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For further details see:
EQWL: Equal-Weight Strategy Not Necessarily Helpful