Markets
Equal-weight S&P 500 fund outpaces the index as money spreads beyond AI
The equal-weight S&P 500 fund has beaten the standard index fund this month by the widest margin since April 2009. Reports link the gap to money spreading beyond AI stocks.
Quick Read
- The equal-weight S&P 500 fund has beaten the standard fund this month by the widest margin since April 2009.
- Reports link the gap to money moving away from AI stocks toward the rest of the market.
- On Friday the pattern reversed: the tech sector fund rose and the equal-weight fund fell 0.8%.
- Analysts are weighing whether the shift could last, with the Fed decision due on Oct. 28.
Why is the equal-weight fund ahead of the S&P 500?
The Invesco S&P 500 Equal Weight ETF (NYSE Arca: RSP) has beaten the standard S&P 500 fund this month by the widest margin since April 2009. An ETF is a fund that trades on an exchange like a stock.
Why it matters: The equal-weight fund gives every company in the index the same weight. The standard fund, the State Street SPDR S&P 500 ETF Trust (NYSE Arca: SPY), weights companies by market value, the total worth of their shares. In that fund, the biggest companies move the price the most.
By the numbers: Reports tie the gap to money shifting out of AI stocks and into the rest of the market. The month's index moves fit that picture. The Nasdaq-100, which leans heavily on large tech companies, has dropped 4.8% this month. The Dow Jones Industrial Average has risen 2.6%. The S&P 500 has fallen 0.4%.
What happened on Friday?
Friday's session ran the other way. The equal-weight fund fell 0.8% and closed at $216.54. The standard S&P 500 fund fell 0.5%.
Large tech stocks held up better. The technology sector fund rose 0.5%. Consumer staples slid 1.9%. Energy jumped 2.6%.
Losses spread widely across the broader market. Of 1,061 stocks tracked, 712 fell and 342 rose.
Could the shift away from AI stocks last?
Analysts are weighing whether money could keep spreading beyond AI stocks. Reports have asked whether the shift has already run its course.
Friday showed how quickly leadership can flip. The equal-weight fund now sits 2.8% below its 52-week high. The standard fund sits 2.5% below its own.
What comes next?
What’s next: The Federal Reserve announces its interest-rate decision on Wednesday, Oct. 28, at 2 p.m. ET. The chair's press conference follows.
On Thursday, Oct. 29, at 8:30 a.m. ET, the government releases its early estimate of economic growth for the July-to-September quarter. September income and spending figures arrive at the same time, with the price gauge the Fed follows.
For readers
What it could mean for you: Savers whose 401(k) or IRA holds a standard S&P 500 index fund own the market-value-weighted version, where the biggest AI-linked companies carry the most weight. If money keeps spreading beyond those names, that fund could keep trailing an equal-weight version, as it has this month. If AI stocks regain the lead, the gap may narrow or reverse. The Fed decision on Oct. 28 and growth data on Oct. 29 might shape which kinds of stocks lead next.
Questions and answers
What is an equal-weight S&P 500 fund?
It holds the companies in the S&P 500 but gives each the same weight, instead of weighting by market value. Smaller companies count as much as the largest tech names.
Why is the equal-weight S&P 500 beating the regular index this month?
Reports link it to money moving away from AI stocks toward the rest of the market. The Nasdaq-100 has dropped 4.8% this month, while the Dow has risen 2.6%.
Is the shift out of AI stocks over?
Analysts are weighing whether it could last. On Friday, the technology sector fund rose 0.5%. The equal-weight fund fell 0.8%.
The numbers
| Invesco S&P 500 Equal Weight ETF (RSP) price | $216.54 |
|---|---|
| Invesco S&P 500 Equal Weight ETF (RSP) change | −0.77% |
| Invesco S&P 500 Equal Weight ETF (RSP) market value | $100 billion |
| Invesco S&P 500 Equal Weight ETF (RSP) 52-week high | $222.77 |
| S&P 500 change | −0.52% |
| 10-year Treasury yield | 5.00% |
Friday’s close
Companies in this story
Share this story
Not investment advice.
