Fund Report: Invesco's RSP Equally Weights the S&P 500

The Invesco S&P 500 Equal Weight ETF (RSP) offers investors a unique perspective on the broader market. Unlike traditional market-cap weighted indexes, RSP assigns equal weight to each of its 500 constituent stocks. 

"RSP is a very simple strategy that equally weights the S&P 500," explains Nick Kalivas, Head of Factor and Core Equity Product Strategy at Invesco. This approach provides a more balanced representation of the market, giving smaller companies a greater influence on the fund's performance compared to traditional cap-weighted indexes. 

RSP’s Equal-Weight Benefits

One of the key benefits of RSP is its exposure to smaller companies, which have a larger representation in the ETF compared to traditional S&P 500 index funds. "Smaller companies tend to outperform larger companies over longer periods," says Kalivas. By equally weighting stocks, RSP provides investors with exposure to this potentially higher-growth segment of the market. 

Additionally, RSP's rebalancing process can create a value tilt. "There's this natural kind of buy low sell high process that takes place during the quarterly rebalance," explains Kalivas. This can lead to the fund overweighting stocks that have underperformed and underweighting those that have outperformed, potentially offering investors value exposure. 

RSP as a Smart Beta ETF

RSP is a prime example of a "smart beta" ETF, a strategy that deviates from traditional market-cap weighting to achieve specific investment goals. "Smart beta is used to describe investing in a portfolio where the stocks are not market cap weight," says Kalivas. By equally weighing stocks, RSP offers investors a different way to access the S&P 500. 

The Growing Trend of Active ETFs

The ETF industry is undergoing a significant transformation, with a growing focus on active management strategies. "The biggest talk is the movement toward active ETFs," says Kalivas. The ETF wrapper's efficiency and cost-effectiveness are driving this trend. 

While RSP is a passively managed fund, the broader trend towards active ETFs highlights the increasing sophistication of the ETF landscape. Investors now have a wider range of options to choose from, allowing them to tailor their portfolios to specific investment goals. 

Overall, the Invesco S&P 500 Equal Weight ETF offers a compelling investment proposition for those seeking a diversified exposure to the S&P 500 with a focus on small-cap and potential value tilts. As the ETF industry continues to evolve, investors can expect to see even more innovative products emerge. 

For more information on RSP and Invesco’s ETF lineup, investors can visit the Invesco website.

^{There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Underlying Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.}

^{Investments focused in a particular industry or sector, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.}

^{Stocks of medium-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.}

^{The Global Industry Classification Standard was developed by and is the exclusive property and a service mark of MSCI, Inc. and Standard & Poor's.}

^{"Standard & Poor’s," "S&P" and "S&P 500," are trademarks of Standard & Poor’s Financial Services, LLC and have been licensed for use by Invesco Capital Management LLC and its affiliates. Invesco S&P 500® Equal Weight ETF is not sponsored, endorsed, sold or promoted by Standard & Poor’s makes no representation regarding the advisability of investing in Invesco S&P 500® Equal Weight ETF.}

^{Before investing, investors should carefully read the prospectus/summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the Fund call 800-983-0903 or visit invesco.com for the prospectus/summary prospectus.}

^{Factor investing (as known as smart beta or active quant) is an investment strategy in which securities are chosen based on certain characteristics and attributes that may explain differences in returns. Factor investing represents an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, both in active or passive vehicles. There can be no assurance that performance will be enhanced or risk will be reduced for strategies that seek to provide exposure to certain factors. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Factor investing may underperform cap-weighted benchmarks and increase portfolio risk.}

^{The opinions expressed are those of the author, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.}

^{A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns. Options might not be suitable for all investors.}