QQQ Gets an Equal Weight Buddy

Sometimes it is good to unfold out.

Case in level: Equal-weight funds are having a little bit of a second. By allocating belongings evenly, they keep away from excessive concentrations in a handful of shares. This 12 months, that has helped a number of such funds mood the magnitude of losses that conventional massive cap index funds have seen. Invesco’s S&P 500 Equal Weight ETF (RSP), for instance, has returned -1.23%, in contrast with -5.13% for the S&P 500 Index. That agency final week added one other fund to its equal-weight suite: the Invesco QQQ Equal Weight ETF (QEW), which tracks the Nasdaq 100.

Although the agency has provided the technique in funds domiciled elsewhere, “the opportunity had never arisen for us to launch a product here in the US,” mentioned Paul Schroeder, QQQ product strategist at Invesco. “It happened to be coincidental, where equal weighted [products] performed very well this year… It’s a pretty timely launch.”

Everyone Gets a Percent

With 100 constituent shares, every will get a 1% allocation in QEW. That can imply the next frequency of buying and selling to rebalance the portfolio than with market-cap weighted funds, though equal-weight funds can, as proven by their 12 months’s returns, outperform cap-weighted indexes. While the Nasdaq 100 is down about 5% up to now in 2026, the Nasdaq Equal Weight Index is down about 3.6%. “You’ve seen megacap growth taking a little bit of a breath,” Schroeder mentioned. “We’ve seen smaller companies outperforming so far year to date. You see value performing really well.”

Equal-weight funds have carried out barely higher than indexes lately:

• The iShares S&P 500 3% Capped ETF (TOPC), which launched final 12 months and has a most allocation to the largest constituent shares of three% every, has returned -3.8% 12 months so far, in contrast with the S&P 500’s -5%.
• Invesco’s S&P 500 Equal Weight Technology ETF (RSPT) has been almost flat, whereas the S&P 500 Information Technology index is down about 8.5%. Invesco’s S&P 500 Equal Weight Energy ETF (RSPG) is up 31%, simply forward of the S&P 500 Energy’s 29% acquire.
• Meanwhile, Invesco’s Russell 1000 Equal Weight ETF (EQAL) is up 1%, in contrast with -5% for the Russell 1000.

Small is Beautiful: “Equal weighting introduces a tilt towards mid and smaller cap companies and tends to outperform when small caps are doing well,” mentioned Aniket Ullal, head of ETF analysis and analytics at CFRA Research. “An equally weighted QQQ would be a good choice for investors who want to stay invested in a tech-heavy ETF that holds all of the Mag 7, but is not too heavily weighted towards mega caps.”