Investors eye equal-weight S&P 500 ETFs to reduce concentration risk as tech stocks now comprise 40% of the index.
The S&P 500’s growing concentration in tech stocks has raised concerns among investors. The top 10 holdings now account for nearly 40% of the index, with tech stocks representing the same share, increasing exposure to sector-specific downturns.
Over the past decade, the S&P 500 delivered a 15% average annual return, but its market-cap weighting has led to outsized influence from a handful of companies. Equal-weight ETFs, like the Invesco S&P 500 Equal Weight ETF (RSP), distribute allocations more evenly across sectors, reducing reliance on tech.
Equal-weight funds allocate roughly 15% to tech, 17% to industrials, and 15% to financials, offering broader diversification while maintaining large-cap exposure.