The Invesco S&P 500 Equal Weight ETF (RSP) surged to a record high on Monday as investors focused on the upcoming Federal Reserve interest rate decision. The fund jumped to a high of $176.55, continuing an uptrend that started on September 11.
RSP is seen as a better S&P 500 alternative
The S&P 500 index is one of the most popular funds in Wall Street since it tracks the biggest companies in the United States.
It was established in 1957 when it was trading at $386, which, adjusted to inflation is worth about $4,071 today.
The fund is made up of 500 companies, which it ranks in terms of market cap. As a result, it is often highly concentrated in the tech industry. Tech stocks account for 32% of the fund followed by financial services, healthcare, consumer cyclical, and communication services.
As a result, large companies like Apple, Microsoft, Nvidia, Amazon, Meta Platforms, and Alphabet have a big role in the fund. The top-ten companies account for about 34% of the fund, making it relatively risky.
The S&P 500 index does well in good times for technology companies. It then underperforms the market when these companies are not doing well. However, since tech has done well in the last decade, the fund has done much better than other ETFs.
The Invesco S&P 500 Equal Weight ETF solves the concentration problem by ensuring that all companies in the fund have an equal weight. As a result, the fund often tilts towards smaller companies in the S&P 500 and reduces risks.
Unlike the S&P 500 index, the RSP fund is mostly made up of industrials, financials, technology, healthcare, consumer discretionary, and consumer staples. Industrials account for 15.8% of the fund while financials, tech, and healthcare account for 14.9%, 12.5%, and 12.5%, respectively.
The biggest companies in the RSP ETF are Kellanova, Mohawk Industries, DR Horton, CBRE Group, Fair Isaac Corp, Globe Life, GE Vernova, and Iron Mountain.
Kellanova, formerly known as Kellog, will exit the fund soon as it was recently acquired by Mars in a $36 billion deal. Mohawk Industries is the biggest flooring company in the world, with a big market share in carpets, tiles, countertops, and wood flooring.
DR Horton is a large restaurant brand while CBRE Group is a leading commercial real estate services provider. The other notable company is Iron Mountain, a REIT that focuses on data storage and data centers.
