Equal-weighted exchange-traded funds (ETFs) have attracted record investments in recent months as signs of an improving U.S. economy and towering valuations of megacaps push investors to look for bargains in traditional economy-linked sectors.
An equal-weighted version of an index assigns uniform weight to each constituent regardless of its size, unlike market capitalization-based indexes where bigger companies tend to have an outsized influence.
As a result, investing in equal-weighted ETFs that provide a more diversified approach and offer exposure to old economy-linked sectors such as energy and manufacturing are coming back in favor as investors look to broaden their exposure beyond Big Tech. "Cyclically tilted sectors, that have been lagging more recently, have started to tick higher on soft landing hopes," said Cooper, a senior macro investment strategist for iShares EMEA at asset manager BlackRock.
The $42-billion Invesco S&P 500 equal-weighted ETF , which mirrors the performance of the S&P 500 equal-weight index
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