Why This Equal-Weight ETF Is Beating the Stock Market in 2025
The Invesco S&P 500 Equal Weight ETF (RSP) has quietly become a standout performer in recent weeks. While tech-heavy funds face uncertainty, this equal-weighted alternative has delivered strong returns—up 8.92% over three months and 5.71% year-to-date as of late December 2025. Its balanced approach is now drawing attention amid shifting stock market trends.
The ETF’s strategy is simple but effective: it weights all 500 companies in the S&P 500 equally, rather than letting giants like the 'Magnificent Seven' dominate. This reduces exposure to tech, which makes up nearly 35% of the traditional cap-weighted index. Instead, RSP spreads risk across sectors, with its top holdings in industrials, financials, technology, healthcare, and consumer discretionary.
Stock market conditions have played into RSP’s strengths. Over the past two months, tech stocks have underperformed the broader S&P 500, while cyclicals and healthcare have led gains. Falling interest rates and economic uncertainty have boosted smaller companies and defensive sectors, helping RSP outperform. Investors, wary of tech’s recent momentum peak, are now seeking ways to diversify without leaving equities entirely. The AI-driven tech rally has left many portfolios heavily concentrated, raising concerns about sharper pullbacks if the sector falters. RSP offers a way to stay invested in leading stock market areas while cutting concentration risk. Its recent performance suggests equal weighting could be a smarter play in a broadening stock market.
RSP’s 8.92% three-month gain and 5.71% year-to-date growth highlight its appeal as a diversified alternative. By reducing reliance on mega-cap tech, the fund positions itself well if stock market leadership continues shifting. For investors looking to balance exposure, this equal-weight approach provides a structured way to stay in equities without overcommitting to a single sector.
