The SPDR S&P 500 ETF Trust (NYSEARCA:SPY | SPY Price Prediction) has a concentration problem that keeps getting worse. The top 10 holdings in a cap-weighted S&P 500 fund now represent a historically outsized share of the index, meaning a handful of mega-cap tech names effectively steer the returns of what most investors assume is a diversified portfolio. When those names stumble, the whole index feels it.
That dynamic has made 2026 a meaningful test case. SPY is down about 3% year-to-date, weighed down by pressure on the largest constituents. Three equal-weight ETFs have navigated that environment better, each offering a structurally different way to own U.S. equities without betting the portfolio on whichever mega-caps happen to be in favor.
Why Equal Weighting Creates a Structural Edge in Certain Regimes
Equal-weight indexes rebalance periodically, trimming positions that have grown and adding to those that have lagged. That mechanic systematically forces a buy-low, sell-high discipline that cap-weighted indexes structurally cannot replicate. When market leadership is broad and many sectors participate in gains, equal-weight funds tend to outperform. When a narrow group of mega-caps drives nearly all returns, as happened through much of 2023 and 2024, cap-weighted funds hold the advantage.
The tradeoff is real: higher turnover from rebalancing, modestly higher fees in most cases, and a tendency to lag during momentum-driven bull runs concentrated in large-cap growth. Investors choosing equal weight are making a bet on breadth over concentration.
Performance Snapshot: Equal Weight vs. Cap Weight
| Fund | 2026 YTD | 1-Year Return | 5-Year Return |
|---|---|---|---|
| SPY (cap-weighted benchmark) | -3% | +31% | +61% |
| RSP (S&P 500 Equal Weight) | +1% | +26% | +46% |
| EQWL (S&P 100 Equal Weight) | -1% | +27% | +67% |
| EUSA (MSCI USA Equal Weight) | 0% | +24% | +39% |
The YTD gap is the clearest illustration of what equal weighting delivers when mega-cap concentration becomes a liability. RSP has outpaced SPY by nearly 5 percentage points so far in 2026, a gap driven by its reduced exposure to the largest tech names that have pulled the cap-weighted index lower.
RSP: The Flagship Equal-Weight Vehicle
The Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP) is the original and largest fund in this category, with nearly $91 billion in assets and an inception date of April 2003. It holds the same roughly 500 companies as SPY but assigns each an equal weight, rebalancing quarterly to maintain that balance.
The sector result looks nothing like SPY. Instead of tech dominating at more than 30%, RSP spreads exposure across the economy: Industrials at 16%, Financials at 15%, and Information Technology at 14%. Apple, Microsoft, and Nvidia each carry roughly the same weight as a mid-sized industrial or regional bank. That flattening is precisely what drove the +1% YTD gain while SPY was falling.
The expense ratio is 0.20%, higher than SPY but reasonable for the active rebalancing the strategy requires. The main caveat is the flip side of the YTD story: during the 2023 mega-cap rebound, RSP lagged SPY by a wide margin as the “Magnificent Seven” drove most of the index’s gains. Equal weight earns its keep in broad markets, not narrow ones.
EQWL: Equal Weighting Within the Mega-Cap Universe
The Invesco S&P 100 Equal Weight ETF (NYSEARCA:EQWL) takes a different angle. Rather than spreading across all 500 S&P constituents, it applies equal weighting only to the 100 largest U.S. companies. Every name in the portfolio is a mega-cap or near-mega-cap, but no single company dominates.
This matters because the S&P 100, in its cap-weighted form, is even more concentrated than the S&P 500. The top five or six names represent an outsized share of that index. EQWL strips out that concentration while keeping the portfolio anchored in the largest, most liquid names in the market.
The five-year return of +67% outpaces both RSP and EUSA over that horizon, reflecting the fact that equal-weighting within the mega-cap tier captured upside from names like Goldman Sachs and Visa that were underweighted in cap-weighted versions of the same index. The -1% YTD result is weaker than RSP’s because the fund still lives entirely within the mega-cap world, and several of those names have sold off in 2026. Investors who want reduced concentration but are not ready to move down the market-cap ladder will find EQWL a reasonable middle ground.
EUSA: The Broadest Equal-Weight Exposure
The iShares MSCI USA Equal Weighted ETF (NYSEARCA:EUSA) covers a wider universe than either RSP or EQWL. The MSCI USA index includes both large and mid-cap U.S. equities, giving EUSA exposure to several hundred companies that never appear in the S&P 500. Each gets an equal weight.
The sector breakdown from the fund’s fact sheet shows a notably balanced portfolio: Industrials at 16%, Financials at 16%, and Information Technology at 16%, essentially three-way parity among the top sectors. Real Estate gets 6% and Utilities 5%, two sectors that are structurally underweighted in cap-heavy indexes.
The expense ratio of 0.09%, making it the cheapest option on this list, less than half the cost of RSP’s 0.20%. Total assets stand at approximately $1.4 billion, smaller than RSP but sufficient for liquid trading. The dividend yield runs near 1.6%.
The tradeoff is the mid-cap exposure itself. In a risk-off environment where investors rotate toward quality and size, mid-caps can underperform large-caps, and EUSA will feel that more than RSP or EQWL. The five-year return of 39% trails both peers, partly because the mid-cap tilt has been a headwind during periods of large-cap dominance.
Which Market Regime Favors Each Fund
Equal-weight strategies earn their strongest returns when market leadership is broad: multiple sectors rising together, mid-caps keeping pace with large-caps, and no single theme or group of names driving the whole index. The 2026 YTD environment fits that description, and RSP’s outperformance reflects it.
RSP is the right starting point for most investors looking to reduce mega-cap concentration within the S&P 500 framework. Its size, liquidity, and long track record make it the most practical choice. EQWL suits investors who want to stay within the mega-cap universe but eliminate the lopsided weighting that makes cap-weighted versions of the S&P 100 essentially a handful of tech bets. EUSA makes the most sense for investors who want the lowest fees and are comfortable with broader market-cap exposure, accepting that mid-cap volatility comes with the territory.
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