Too Many Investors Ignore EQL’s Winning Formula While Piling Into Normal S&P 500 Funds

While the cap-weighted S&P 500 has spent years handing roughly a third of its weight to a handful of mega-cap tech names, a quieter fund has been delivering comparable long-term returns with a structurally different approach. Alps Equal Sector Weight ETF (NYSEARCA:EQL) doesn’t pick winners among sectors. It treats all eleven equally.

What EQL Actually Does

EQL is a fund-of-funds, holding all 11 Select Sector SPDR ETFs and allocating roughly 9% to each, from energy and utilities to technology and financials. The fund rebalances quarterly. This differs meaningfully from Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP), which equally weights individual stocks. EQL equally weights sectors, then lets market-cap weighting play out within each.

The practical effect is a hard cap on technology concentration. In a cap-weighted S&P 500 fund, technology represents roughly 34.4% of the portfolio. In EQL, it’s capped near 9%. Sectors like energy, utilities, and real estate get the same seat at the table as tech and financials, regardless of where market momentum flows.

The Performance Case

The outperformance story is most visible in 2026. EQL is up 4.96% year-to-date through March 6, while SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 1.4% over the same period. That gap reflects what happens when mega-cap tech stumbles: a fund without that concentration absorbs the blow differently.

Over one year, EQL and SPY have delivered identical 17.4% returns, with EQL carrying significantly less technology sector concentration during that period. RSP trailed both over the same period.

What makes EQL’s long-term record notable is that it has matched or beaten SPY despite its structural underweight in technology — the market’s dominant sector for much of the past decade. The five-year data bears this out: EQL’s 77.03% gain edges SPY’s 75.27% and leads RSP by a wider margin. ETF Trends noted in late 2025 that “EQL has outperformed the S&P 500 Equal-Weight Index and shown lower volatility this year.” VettaFi’s head of research Todd Rosenbluth has described EQL as a “potential complement to market-cap-weighted S&P 500 funds, allowing investors to reduce concentration risk in mega-cap stocks and achieve broader sector exposure.”

The Real Tradeoffs

Equal sector weighting is a structural bet against momentum. When one sector runs hot for years, as tech did through much of the 2020s, EQL will consistently underweight it. Investors who want full participation in a tech-driven rally will find that frustrating.

EQL’s structural diversification comes at a cost. Its 0.27% expense ratio exceeds SPY’s, a gap that compounds meaningfully over a decade. Its $667 million asset base also means thinner liquidity than mega-funds, which can widen bid-ask spreads in volatile markets.