Equal-weighted indexes celebrate a birthday. This is the 20th anniversary of the launch of the Invesco S&P 500 Equal Weight ETF (RSP). This indexes weights all 500 stocks in the S&P 500 equally, as opposed to weighting by market capitalization, as the standard S&P 500 does. The idea of equal-weighting an index was a radical idea when it was launched in 2003. It came out of the ashes of the dot.com disaster, where technology stocks dominated the major indices, and when they crashed, they took the indices down with them. Equal-weighted indices have been gaining adherents in the past few years because many believe the emphasis on market cap gives unfair weighting to technology and distorts the picture of the U.S. investing universe. Proponents say broad, market cap weighted indexes are the purest form of indexing. They own nearly everything and let the market decide what it's all worth and what the right weights are. This is a serious issue, with north of $7 trillion indexed to the S&P 500.
Join us Wednesday on ETF Edge at 1:10 PM ET when our guests will be Reggie Browne, Principal of GTS and one of the great authorities in the ETF business, and Kevin Simpson, portfolio manager at Capital Wealth Planning. We'll talk about market cap weighted indices and their alternatives. Plus, Reggie comments on which big firms are poised to enter the ETF space, and Kevin tells us what ETFs he's recommending to clients now.
Making a contrarian bet on the real estate business. Many economists and market experts are eyeing real estate as the next pressure point for the U.S. economy, but Columbia Threadneedle is offering ways to make a contrarian bet on the real estate business. Even in the face of a potential recession, the firm just launched its new Columbia Research Enhanced Real Estate ETF (CRED) – as part of its strategic beta strategy. Top holdings include Prologis, American Tower, Simon Property Group and Public Storage.
Getting growth without big-cap tech. Beyond the usual roster of mega-cap "FAANG" names, Citigroup says there are other ways to bet on growth. In fact, they recommend dialing back your exposure to the widely held tech plays and opting for mid-cap growth ETFs instead – like the iShares Russell Mid-Cap Growth ETF (IWP), the Vanguard Mid-Cap Growth ETF (VOT) and the Invesco Nasdaq Next Gen 100 ETF (QQQJ).
Battle for a bitcoin ETF rages on. Crypto exchange-traded-product issuer 21Shares, which has teamed up with Cathie Wood's ARK Fund, just made another push for a spot bitcoin ETF. The firm refiled an application for its ARK 21Shares Bitcoin ETF (ARKB), which would track the cryptocurrency's price as measured by the S&P Bitcoin Index. CEO Hany Rashwan argues that such a fund would offer U.S. investors protections that don't currently exist – "because there aren't available, easy, regulated options at home."
An easy way to gain exposure to the top U.S. ETFs. DriveWealth just rolled out a new fund that targets the top 100 U.S.-listed ETFs across all sectors, industry groups and asset classes. The ETF – which will be rebalanced on a quarterly basis – tracks an equal-weighted index called the ICE DriveWealth 100 Index. Right now, top holdings include the ProShares Bitcoin Strategy ETF (BITO), the iShares MSCI Poland ETF (EPOL) and the SPDR S&P Homebuilders ETF (XHB).
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