The Case For The Equal Weighted ETF ‘EQAL’

March 13, 2015

ETF Exposure

There are currently two ETFs on the market that offer exposure to the equal-weighted Russell 1000. They are EQAL from PowerShares, and the Guggenheim Russell 1000 Equal Weight ETF (EWRI | B-66). Below is a side-by-side comparison:

 

Ticker EQAL EWRI
Issuer Powershares Guggenheim
30D Volume 220K 13.4K
Implied Liquidity 15.7M 7.8M
AUM 157.5M 95.7M
Expense Ratio 0.20% 0.40%
Creation Fee $500 $2,500
Rebalance Frequency Quarterly  Quarterly

 

While both ETFs are issued by very reputable fund sponsors, a few subtle differences lead me to favor EQAL. For one, a lower expense ratio and creation fee will help reduce costs and should aid in tracking error.

Conclusion

I feel there are definite benefits of using an equal-weight Russell 1000 Index as compared with its market-cap-weighted and S&P 500 counterparts. Translating this exposure into an ETF, I favor using EQAL to capture this exposure.

At the time this article was written, certain Stadion portfolios held long positions in EQAL. References to specific securities or market indices are not intended as specific investment advice.


Founded in 1993, Stadion Money Management is a privately owned money management firm based near Athens, Georgia. Via its unique approach and suite of nontraditional strategies with a defensive bias, Stadion seeks to help investors—through advisors or retirement plans—protect and grow their “serious money.” Contact Stadion at 800-222-7636 or www.stadionmoney.com. References to specific securities or market indexes are not intended as specific investment advice.

 

 

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