This Invesco ETF Equal-Weights the S&P 500

Key Morningstar Metrics for Invesco S&P 500 Equal Weight ETF

• Morningstar Medalist Rating: Neutral
• Process Pillar: Average
• People Pillar: Above Average
• Parent Pillar: Average

Invesco S&P 500 Equal Weight ETF RSP suffers from high turnover and high volatility because it assigns the same weight to every S&P 500 stock.

The fund replicates the S&P 500 Equal Weight Index, which pulls in all S&P 500 stocks and weights them equally at each quarterly rebalance. An index committee has discretion over the S&P 500’s roster, and those decisions flow through to the equal-weighted index. Eligible stocks must meet minimum liquidity, size, and profitability standards. The committee-based approach lacks transparency but provides flexibility, which can reduce unnecessary changes during reconstitutions.

Equal-weighting brings the portfolio’s average market cap lower than that of the Morningstar US Large-Mid Cap Index. This effect is amplified by the market’s current and heavy concentration in a few large companies. The portfolio also tends to hold lower-quality stocks and maintains a slight value tilt compared with the category index. This exposes the fund to higher volatility but could lead to outperformance when value stocks surpass growth stocks.

Equal-weighting improves diversification, though. While the market-cap-weighted S&P 500 allocated over 20% to its top three names, 86 holdings collected the same 20% of the equal-weighted index at the end of July 2025. This portfolio’s top holdings are the stocks that do best between rebalances. Still, it’s unlikely for any holding to ever take up more than 1% of the portfolio.

Lower concentration comes with trade-offs. Market-cap-weighting allows high performers to flourish, and equal-weighting systematically reallocates from strong performers to weak performers at each rebalance. If a stock rallies over several rebalance periods, like Nvidia NVDA has, its position is routinely cut down, damping the performance of this fund relative to the S&P 500, which has enjoyed that stock’s full benefit.

Because of the smaller technology allocation, the exchange-traded fund underperformed the Morningstar Category index by 2.99 percentage points annualized over the 10 years through July 2025, with much of that underperformance coming in recent years. Its smaller-company focus also led to slightly higher volatility and can lead to more severe drawdowns.

Invesco S&P 500 Equal Weight ETF: Performance Highlights

The ETF underperformed the Morningstar US Large-Mid Cap Index by 42 basis points annualized from its April 2003 inception through July 2025. A smaller-company focus made the fund’s returns more volatile than the category index, weighing on risk-adjusted returns. Smaller stocks tend to fluctuate more than their larger counterparts, bringing the fund’s volatility closer to that of the Morningstar US Mid Cap Index, which is composed of mid-cap stocks.

The fund lagged the category index by a much wider margin recently, though, as underexposure to the best-performing large technology stocks, like Nvidia, Microsoft MSFT, and Apple AAPL, held it back. The ETF lagged the Morningstar US Large-Mid Cap Index by 7.49 percentage points annualized over the three years through July 2025.

Equal-weighting has hurt performance lately, but it hasn’t always. Tech stocks were hit hard in 2022, and the fund’s lower stake in these large- and mega-cap names cushioned the blow. The ETF outpaced the category index by 7.90 percentage points that year.