An S&P 500 index fund is a good way to make a broad investment in U.S. stocks at low cost. But it is also a more concentrated approach than some investors realize, because the index is weighted by market capitalization. Another broad approach you might consider is to make use of an equal-weighed index fund.
The $34 billion Invesco S&P 500 Equal Weight ETF RSP is now 20 years old — it was launched on April 24, 2003. Nick Kalivas discussed the fund’s performance and its lower-risk approach in an interview. So far this year, the index’s concentration has helped its performance, Kalivas said, with 10 stocks accounting for 90% of the S&P 500’s 7.5% return during the first quarter. “It was a concentrated megacap rally,” he said. This year through April 24, SPY is up 8.3%, while RSP is up 3.3%.