Equal-weight — also called equal-weighted — exchange-traded funds (ETFs) are popular because they offer enhanced diversification and a different, less common approach to investing compared to market-cap-weighted ETFs.
Cap-Weighted ETFs vs. Equal-Weight ETFs
Most mutual funds and ETFs are capitalization-weighted, or cap-weighted. This means larger companies receive larger allocations and, as a result, have greater influence on performance. It’s thought that cap-weighted ETFs better reflect the market, have lower internal turnover and provide better long-term performance by aligning with dominant companies.
The drawback to cap-weighted ETFs is concentration. When you invest in a cap-weighted fund, more of your money goes to the bigger names that have probably gone up in price and may be more stretched in value, while less goes to smaller companies that may have lagged, says Nick Kalivas, head of factor and core equity ETF strategy at Invesco.
These big names can also have a disproportionate effect on volatility. In the first quarter of 2026, the top 10 names in the S&P 500 drove over 50% of the index’s volatility as measured by standard deviation, Kalivas says. Before COVID-19, he says, they contributed less than one-quarter to the index’s standard deviation.
“So there’s significantly more risk present from those big names, and equal weight in the current environment may be the way to reduce that,” he says.
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How Equal-Weight ETFs Work
In equal-weight ETFs, each stock receives roughly the same allocation. In an ETF with 100 holdings, each stock would represent about 1% of the portfolio.
That structure promotes diversification, reduces concentration risk and gives smaller companies more influence. There’s also a natural buy-low, sell-high, anti-momentum trade built in, Kalivas says. When a stock appreciates enough to throw the fund out of balance, it is trimmed, and the proceeds are allocated to stocks with lower performance.
This can create an excess return premium over time, but it isn’t “free alpha.” Equal-weight funds tend to be more volatile because they hold larger allocations to smaller names, and they work best when market performance isn’t dominated by a handful of mega-cap stocks.
They can also provide better access to broad market trends. In sectors like healthcare, financials or technology, an equal-weight fund is more likely to capture the underlying economics of a trend rather than leave investors beholden to a few giants, Kalivas says.
You can see this in consumer discretionary funds where Amazon.com Inc. (ticker: AMZN) and Tesla Inc. (TSLA) combined make up over 40% of some cap-weighted funds. So are you really investing in the sector, or just Amazon and Tesla?
7 Equal-Weight ETFs With Strong Recent Performance
The seven ETFs on this list are all beating the S&P 500 index year to date. If you’re interested in equal-weight investing, this timely list is a great place to begin:
| Equal-Weight ETF | Assets | Expense Ratio |
| Defiance Quantum ETF (QTUM) | $4.3 billion | 0.40% |
| Invesco S&P 500 Equal Weight Energy ETF (RSPG) | $624.1 million | 0.40% |
| Invesco S&P 500 Equal Weight Technology ETF (RSPT) | $4.6 billion | 0.40% |
| SPDR NYSE Technology ETF (XNTK) | $1.8 billion | 0.35% |
| SPDR S&P Metals and Mining ETF (XME) | $5.3 billion | 0.35% |
| Direxion Nasdaq-100 Equal Weighted ETF (QQQE) | $1.2 billion | 0.35% |
| MicroSectors FANG+ ETN (FNGS) | $523.4 million | 0.58% |
Defiance Quantum ETF (QTUM)
This innovative fund is designed to provide shareholders with targeted exposure to companies specializing in quantum computing and machine learning technology.
As an index fund, QTUM tracks the BlueStar Quantum Computing and Machine Learning Index, which includes global stocks that derive at least 50% of revenue from those emerging technologies. This includes companies that develop or use quantum computers or their components.
While quantum computing is still in the growing stages, investors appear to be optimistic about its potential. QTUM has returned 32.9% year to date and 47.6% annualized over the past three years as of May 20, making the S&P 500 look like the tortoise to QTUM’s hare in the stock market race.
Emerging technology is a volatile sector, and QTUM is a fairly aggressive fund. So, think of it as more of a high-potential-upside and high-volatility play rather than a core portfolio holding.
Invesco S&P 500 Equal Weight Energy ETF (RSPG)
Energy stocks can be boom-or-bust investments, but RSPG gives investors a more balanced way to play the sector. The fund tracks the S&P 500 Equal Weight Energy Plus Index and generally invests at least 90% of its assets in the securities that make up that benchmark.
Unlike a traditional market-cap-weighted energy fund, RSPG does not let dominant players like Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) dominate the portfolio. Instead, it spreads exposure more evenly across the S&P 500’s energy names, giving smaller holdings a bigger role in performance. That can help when leadership broadens beyond the sector’s giants, though it can also add volatility.
But with that volatility has come outperformance of late: RSPG returned 37.1% year to date and about 21% annualized over the past three years as of May 20. For comparison, market-cap-weighted S&P 500 energy sector funds returned roughly 19% over the past three years.
Invesco S&P 500 Equal Weight Technology ETF (RSPT)
RSPT is designed for investors who want technology exposure without making an oversized bet on the sector’s largest companies. The fund tracks an equal-weighted version of S&P 500 technology stocks, giving each holding a similar starting influence rather than letting mega-caps drive most of the returns.
That makes RSPT especially interesting in a market where enthusiasm around artificial intelligence has pushed a small group of tech leaders to dominate many traditional indexes. Equal weighting gives software, hardware and IT services companies a more meaningful role, which can help if tech leadership broadens.
The trade-off is that RSPT may lag when the biggest tech names are doing most of the heavy lifting. But it hasn’t been an issue this year: RSPT is up 28.7% year to date compared to under 16% for some of its market-cap peers. RSPT is lagging a bit over the past three years, however, due to the recent dominance of mega-cap tech companies. RSPT returned 29.8% annualized over the past three years compared to over 37% for some of its market-cap-weighted peers.
SPDR NYSE Technology ETF (XNTK)
Tech exposure is hard to avoid in a modern portfolio, but most traditional tech funds are heavily tilted toward the sector’s biggest names. XNTK offers a different approach.
The fund tracks the NYSE Technology Index, which includes 35 leading U.S.-listed technology-related companies and gives each roughly equal weight in the portfolio. This lets investors gain broader exposure across the sector, rather than concentrating in a handful of mega-cap stocks. The portfolio also includes information technology companies as well as some consumer discretionary names, creating a wider lens on innovation than a plain-vanilla sector fund.
As of mid-May, XNTK is up 22.9% year to date, a notable showing compared with the tech-heavy Nasdaq composite’s 12.8% gain over the same period. XNTK has also returned an amazing 40.2% annualized over the past three years.
SPDR S&P Metals and Mining ETF (XME)
XME has benefited from one of the market’s brighter corners this year: metals and mining. The fund tracks the S&P Metals & Mining Select Industry Index and offers exposure to companies across aluminum, coal and consumable fuels, copper, diversified metals and mining, gold, precious metals and minerals, silver and steel.
That makes XME a tactical play on commodity demand, infrastructure spending, industrial activity and, in some cases, inflation concerns. Its equal-weight approach is especially useful in a cyclical industry because it keeps the portfolio from being dominated by the largest miners.
The fund is up about 9.3% year to date through May 20 and has returned about 35% annualized over the past three years.
Direxion Nasdaq-100 Equal Weighted ETF (QQQE)
QQQE offers a simple twist on one of the market’s most widely followed growth benchmarks. Instead of weighting Nasdaq-100 companies by market value, the fund tracks the Nasdaq-100 Equal Weighted Index, where each constituent is initially set at 1%.
That structure can reduce concentration risk in familiar Nasdaq leaders such as Nvidia Corp. (NVDA), Apple Inc. (AAPL) and Tesla. It also gives investors more exposure to the rest of the Nasdaq-100, including industrials, healthcare and consumer names that can get overshadowed in the traditional cap-weighted index.
QQQE has returned 12.3% year to date. This doesn’t quite keep up with the Nasdaq-100 market-weighted index, which has returned 15% year to date, but it does outshine the S&P 500. QQQE also returned 17.5% annualized over the past three years.
MicroSectors FANG+ ETN (FNGS)
FNGS proves that you don’t have to abandon the mega-cap stars just to get equal-weight exposure. It tracks 10 industry leaders across technology, internet and media companies, including the FAANMG: Facebook, which is now known as Meta Platforms Inc. (META), Apple, Amazon, Netflix Inc. (NFLX), Microsoft Corp. (MSFT) and Alphabet Inc. Class A (GOOGL), Google’s parent company. Each of the 10 stocks is given a 10% weight in the portfolio.
A few important things to note: FNGS is an exchange-traded note, or ETN, rather than an ETF. Unlike ETFs, which typically hold a portfolio of securities, ETNs are unsecured debt obligations issued by a financial institution. That means FNGS investors are exposed not only to the performance of its benchmark, the NYSE FANG+ Index, but also to the credit risk of its issuer, Bank of Montreal.
FNGS has beaten the market with around a 9% return year to date and 36.2% annualized over the past three years, but with more volatility. So treat this one as a flavorful topping and not the base of your portfolio sundae.
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7 Top-Performing Equal-Weight ETFs to Buy Now originally appeared on usnews.com
Update 05/21/26: This story was previously published at an earlier date and has been updated with new information.
