The recent tech selloff, spurred by concerns over capital spending in AI, has led investors to rotate into value stocks, benefiting the equal-weighted S&P 500. This index, which assigns equal importance to each constituent, is less vulnerable to the volatility and downside risks associated with tech-heavy, market-cap-weighted indices. The diversified sector exposure of the equal-weighted S&P 500, particularly in industrials, utilities, and financials, has allowed it to weather the storm better than its cap-weighted counterpart. Despite the broader market's decline, strategists at SocGen have recommended the equal-weighted S&P 500 as a strategic investment, citing its alignment with long-term "America First" policies and its relatively low valuation compared to historical averages.
The Invesco S&P 500 Equal Weight ETF (RSP) experienced a slight decline, dropping 0.46% to $181.35 at 11:00 AM on Monday, January 27.