Achieve Robust Diversification With These 3 Equal-Weight ETFs

Key Points

• Equal-weight ETFs offer more balanced exposure than traditional market-cap-weighted funds, which can concentrate heavily in a few large companies.
• RSP, QQEW, and DFVE each apply equal weighting to different indexes, with 2026 year-to-date returns ranging from about 12% to 13%.
• Investors should weigh trade-offs among these funds, including higher expense ratios and, in some cases, lower assets under management and trading volume.

Exchange-traded funds (ETFs) remain among the very most popular investment vehicles, with inflows in the first half of 2026 reaching a record $1 trillion across the ETF universe. Investors continue to flock to these funds for their ready-made diversification, as a single trade can get you access to dozens, hundreds, or even more different stocks or other securities. However, investors who don't pay attention to an ETF's methodology and weighting structure may inadvertently end up with a less diversified portfolio than they expect.

Many ETFs track indexes that weight assets by market capitalization or other factors, which can lead to significant imbalances within a basket. An investor expecting a broad approach to a sector or industry, for instance, may end up with heavy exposure to a handful of names and much less exposure to the rest of the group. This is not necessarily a problem, but it is something many investors don't keep in mind. One solution for investors seeking greater balance across an ETF's entire basket is to focus on equal-weight funds like those listed below.

An Alternative to Traditional S&P 500 Funds

When most investors think of the S&P 500, they think of the free-float market-cap-weighted index in which the largest companies hold the most sway. However, the Invesco S&P 500 Equal Weight ETF NYSEARCA: RSP tracks an equal-weight version of the index comprised of the same stocks. This leads to exposure that is much more balanced across the entire index—although it can come at the expense of outperformance when the largest companies in the S&P are thriving.

As investors may expect, the RSP holds just over 500 positions, none of which represents more than about a third of a percent of the overall portfolio. Compare this to a fund like the SPDR S&P 500 ETF Trust NYSEARCA: SPY, a go-to fund that tracks the S&P 500 index, in which the largest holdings represent 7% or more.

In the case of RSP, the equal-weighting approach means not only greater risk mitigation but also improved performance so far in 2026. The fund has returned close to 12% year to date (YTD), beating the broader S&P 500 in the process. In exchange, investors must be prepared to spend a bit more, and the RSP has an annual fee of 0.20%, substantially higher than the cheapest broad S&P funds.

Equal Weighting for the Nasdaq-100

The First Trust NASDAQ-100 Equal Weighted Index Fund NASDAQ: QQEW takes a similar approach to the RSP above, but with a focus on the Nasdaq-100 Index instead of the S&P. The Nasdaq-100 weights its collection of major non-financial companies using a modified market-cap approach, leading to some positions in Nasdaq-100 ETFs being significantly larger than others.

QQEW equalizes its roughly 52 holdings so that each represents no more than about 2.8% of the basket. This can help to reduce some of the tech-sector overweighting that happens in traditional Nasdaq-100 funds. However, because of the smaller number of positions overall and the importance of tech stocks to the broader Nasdaq-100 index, even weighting the positions equally does not completely eliminate a bias toward tech.

This fund has returned nearly 12% YTD and carries a higher expense ratio at 0.55%. It also has fairly modest assets under management (AUM) and trading volume, making it perhaps more appropriate for less active, buy-and-hold traders than those seeking regular liquidity.

A Take on the Fortune 500 List With Equal Weighting

Yet another approach to equal weighting can be found with the Doubleline Fortune 500 Equal Weight ETF NYSEARCA: DFVE, an ETF dedicated to an equal-weight version of the Fortune 500 list. The Fortune 500 tracks the largest companies in the United States by revenue, rather than market cap, so it can diverge fairly significantly from the S&P 500.

DFVE holds around 467 positions, mostly large- and mid-cap stocks, with the largest position accounting for only about 0.39% of the total portfolio. So far this year, it has returned just under 13% YTD, and the expense ratio of this fund is on par with RSP at 0.20%. One caveat for potential investors is that DFVE has substantially lower AUM and average trading volume than the other funds on this list, suggesting liquidity may be more of an issue. Still, for long-term investors seeking an alternative to the S&P 500 and equal weighting, DFVE may be worth considering.