Investco S&P 500 Equal Weight ETF Key Morningstar Metrics
- Morningstar Medalist Rating: Neutral
- Process Pillars: Average
- People’s Pillars: Above average
- Parent Pillars: Average
The Investco S&P 500 Equal Weight ETF (RSP) faces challenges with high volatility and sales due to its equal weighting of all S&P 500 stocks.
This fund tries to replicate an equal weight version of the S&P 500, including every stock within that index and redistributing weight evenly every quarter. While the S&P 500 stock list is chosen by an Index Committee, the method isn’t exactly transparent. This allows for some flexibility, which can help minimize unnecessary adjustments.
In comparison to the Morningstar US large cap index, the average market cap of this portfolio is notably lower. This is mostly because of the significant market concentration seen in a few major companies currently. Furthermore, while the portfolio tends to keep lower quality stocks, it maintains a smaller value slope compared to its peers. This might lead to heightened volatility, but if value stocks eventually outperform growth stocks, it could benefit the fund.
On the bright side, the equal weighting boosts diversification. The market-cap-weighted S&P 500 allocates over 20% to its top three stocks, whereas the 86 holdings of this fund had just 20% collectively weights as of late July 2025. Generally, individual holdings represent less than 1% of the total portfolio.
But with lower concentrations come certain trade-offs. Market cap weights can let higher-performing stocks flourish, while equal weights may lead to shifting from strong to weak performers. For instance, where Nvidia (NVDA) is concerned, stocks tended to decrease their positions over multiple rebalancing rounds, which affected the fund’s overall performance relative to the S&P 500.
With minimal tech allocations, the fund lagged 2.99 percentage points behind the Morningstar Category Index over the last decade, ending in July 2025. This limited focus on tech can introduce a bit more volatility and result in steeper downturns.
Investco S&P 500 Equal Weight ETF: Performance Highlights
This ETF performed below the Morningstar US large cap index by 42 basis points from April 2003 to July 2025. Fewer stocks typically experience higher fluctuations compared to their counterparts, pulling the fund’s volatility closer to that of the Morningstar US Mid-Cap Index, which includes mid-cap stocks.
Recently, the fund has fallen behind its category index by a wider margin. It has not sufficiently benefitted from the performance of leading tech stocks like NVIDIA, Microsoft (MSFT), and Apple (AAPL). Over a three-year period leading up to July 2025, the ETF trailed the Morningstar US large-cap index by 7.49 percentage points.
While the equal weighting has hindered performance recently, it’s not always detrimental. Tech stocks faced significant declines in 2022, and the fund’s lower exposure to these major players mitigated the impact. In fact, that year, the ETF outperformed the category index by 7.90 percentage points.
