Latest news with #InvescoS&P500EqualWeight
Yahoo
27-05-2025
- Business
- Yahoo
1 No-Brainer S&P 500 Index Fund to Buy Right Now for Less Than $200
The S&P 500 is considered the best benchmark of how the U.S. stock market is performing. One major problem is the S&P 500's concentration in large-cap tech stocks. The Invesco S&P 500 Equal Weight ETF can be a smart way to get broad stock market exposure. 10 stocks we like better than Invesco S&P 500 Equal Weight ETF › The S&P 500 is widely considered to be the best indicator of how the U.S. stock market is doing, and it's easy to understand why. After all, it contains 500 of the largest companies in the United States, and these collectively represent 80% of the overall value of all publicly traded companies. However, one characteristic of the S&P 500 that is very important for investors to understand is that it's a weighted index, which means that larger companies account for a greater percentage of the index's performance. And with the rise of trillion-dollar megacap technology companies over the past decade or so, this weighting has resulted in a rather high concentration in just a few big companies. For example, the largest companies in the United States, Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT), make up 6.8% and 6.2% of the entire weighting of the S&P 500, respectively. The 10 largest companies in the index make up 35.6% of the S&P 500's performance. That's more than the smallest 300 components of the index combined. In simple terms, I like the idea of investing in 500 of the largest and most successful U.S. companies. But I don't like that much of my investment performance dependent on just a few stocks, while hundreds of others barely have any impact on my long-term returns. The Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP) solves this problem. It invests in the same 500 companies as an S&P 500 index fund, except every single component has the same influence on the ETF's performance. That means companies such as General Motors (NYSE: GM), Occidental Petroleum (NYSE: OXY), and Hormel Foods (NYSE: HRL) carry the same weight as tech behemoths such as Apple, Microsoft, and Nvidia (NASDAQ: NVDA). The idea is that if American business collectively performs well, you'll reap the benefits. But you also won't feel a significant sting if, say, Nvidia posts a bad quarterly report. Sure, you'll miss out on some of the benefits if massive companies perform well, but this tends to be offset over time by the greater exposure to smaller components of the S&P 500, which tend to have more dynamic growth potential. Speaking of growth potential, although the equal weight S&P 500 has underperformed the traditional version of the index during the megacap tech surge of the past few years, you might be surprised to learn that the equal weight index has actually outperformed its weighted counterpart over the long run. In fact, over the past 40 years, the S&P 500 equal weight index has produced a total return that's more than 400 percentage points greater than the weighted S&P 500. The Invesco S&P 500 Equal Weight ETF has a 0.20% expense ratio, which is a bit higher than you'd pay for most standard S&P 500 index funds but is still on the low end for a specialized ETF product. There's nothing wrong with simply buying a traditional S&P 500 index fund and holding it for the long term. Doing so has historically been a strong wealth creation strategy, and in full disclosure, I own shares of the Vanguard S&P 500 ETF (NYSEMKT: VOO) in my portfolio. However, the relative top-heaviness of the S&P 500 makes the index's performance disproportionately dependent on just a few companies, so if you aren't too comfortable with this level of concentration, the Invesco S&P 500 Equal Weight ETF is an alternative that could be worth a closer look. Before you buy stock in Invesco S&P 500 Equal Weight ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Invesco S&P 500 Equal Weight ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor's total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Matt Frankel has positions in General Motors and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends General Motors and Occidental Petroleum and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 1 No-Brainer S&P 500 Index Fund to Buy Right Now for Less Than $200 was originally published by The Motley Fool
Yahoo
17-04-2025
- Business
- Yahoo
Want to Invest in the S&P 500? This ETF Is a Smart Choice With Uncertainty Surrounding the Stock Market and Economy.
The S&P 500, which tracks the 500 largest U.S. companies on the market, is the stock market's most important index. It's become the benchmark for measuring stock and exchange-traded fund (ETF) performance locally and abroad. Unfortunately, even the S&P 500 isn't immune to high volatility, as we've seen in the days following President Donald Trump's new tariff plan. The plan has sparked concerns about higher costs, reduced consumer spending, and increased recession chances. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Despite the uncertainty in the stock market, the S&P 500 is one of the best investments anyone can make. However, given the current environment, investors could take a different approach to investing in the S&P 500 by buying shares of the Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP). The S&P 500 is market cap-weighted, so larger companies account for more of the index than smaller companies. This has always been the case, but the problem is that megacap stocks (especially in the tech sector) have shot up in valuation over the past few years, and now the S&P 500 is a little too top-heavy. Below is how much the S&P 500's top 10 holdings are represented in both the standard S&P 500 and the equal-weight ETF: Company Percentage of S&P 500 Percentage of Equal-Weight ETF Apple 7.24% 0.19% Nvidia 6.07% 0.20% Microsoft 5.85% 0.21% Amazon 3.93% 0.19% Meta Platforms 2.88% 0.18% Alphabet (Class A) 1.97% 0.11% Berkshire Hathaway 1.87% 0.22% Broadcom 1.84% 0.20% Alphabet (Class C) 1.62% 0.09% Tesla 1.62% 0.21% Data source: Vanguard and Invesco. S&P 500 percentages as of Feb. 28. Equal-weight percentages as of April 11. There's a stark difference between 10 companies making up 34% of an index and those same companies comprising 1.8%. When it's going well, it can go very well. When it's going badly, it can go very badly. Other than Berkshire Hathaway, every stock in the S&P 500's top 10 holdings is down year to date through April 14 and has weighed on the index. The equal-weight ETF helps hedge against concentration risks, especially with the "Magnificent Seven" stocks and the tech sector. Every sector will likely face challenges with the Trump administration's new tariff plan, but the tech sector could be more vulnerable because of how many top companies rely on imports from countries like China and Taiwan. I don't see the tech sector stalling or losing long-term growth potential, but investors could lean more toward dividend and value stocks until some of the tariff-related uncertainty works itself out. With the equal-weight ETF, your exposure is more evenly spread between sectors: Sector Equal-Weight S&P 500 ETF Standard S&P 500 Industrials 15.79% 8.3% Financials 14.69% 14.5% Information technology 13.31% 30.7% Health care 11.82% 10.8% Consumer discretionary 10.02% 10.5% Consumer staples 8.02% 5.9% Utilities 6.52% 2.4% Real estate 6.09% 2.2% Materials 5.10% 2% Energy 4.31% 3.3% Communication services 4.03% 9.4% Data source: Invesco and Vanguard. Equal-weight percentages as of April 11. S&P 500 percentages as of Feb. 28 The S&P 500 is meant to give a snapshot of the U.S. economy. The equal-weight ETF ensures a more balanced representation instead of one skewed by a handful of megacap tech companies. Going for the equal-weight ETF doesn't mean giving up your chance for high growth. In fact, since it hit the market in April 2003, the equal-weight ETF has outperformed the S&P 500. I still believe the standard S&P 500 should be the foundation of most investors' portfolios, but the equal-weight ETF can be a great complement to the top-heavy nature of the S&P 500. Before you buy stock in Invesco S&P 500 Equal Weight ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Invesco S&P 500 Equal Weight ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $518,599!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $640,429!* Now, it's worth noting Stock Advisor's total average return is 794% — a market-crushing outperformance compared to 153% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 14, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Want to Invest in the S&P 500? This ETF Is a Smart Choice With Uncertainty Surrounding the Stock Market and Economy. was originally published by The Motley Fool
