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ALPS Equal Sector Weight ETF

Technology

Consumer Cyclical

Utilities

Energy

Industrials

Healthcare

Financial Services

Real Estate

Basic Materials

Consumer Defensive

Communication Services

Other

In order to track the underlying index, the fund will use a fund of funds approach, and seek to achieve its investment objective by investing at least 90% of its total assets in the shares of the Underlying Sector ETFs. The underlying index is an index of ETFs comprised of all active Select Sector SPDR ETFs in an equal weighted portfolio. It is non-diversified.

Energy Select Sector Spdr

Communication Services Select Sector Spdr

Consumer Discretionary Select Sector Spdr Fund

Select Sector Spdr Tr Rl Est Sel Sec

Financial Select Sector Spdr Fund

Health Care Select Sector SPDR Fund

Industrial Select Sect Spdr

Technology Select Sector Spdr Fund

Select Sector Spdr Consumer Staples ETF

Materials Select Sector Spdr

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Long Ideas

Sector ETFs

Broad U.S. Equity ETFs

Analyst Ratings

Trading Ideas

ETFs

Select Sector SPDR-Consumer Discretionary

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An ETF With An Equal Dose Of All Sectors

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INVSC S&P 500 EQL WEIGT USD UNT ETF

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Simplify Exchange Traded Funds Simplify Market Neutral Equity Long/Short ETF

iShares Trust iShares MSCI Emerging Markets Quality Factor ETF

Equally weighting securities is one of the oldest and most widely used alternatives to weighting securities by market capitalization. There are hundreds of equal-weight exchange traded funds on the market today.
Some go beyond equally weighting stocks or bonds, offering investors exposure to an equal-weight basket of other ETFs. The ALPS Equal Sector Weight ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/eql#NYSE">EQL</a>) is one of the most venerable names in that group.
<h3>What Happened</h3>
The $140.6&nbsp;million EQL, which debuted in July 2009, &ldquo;delivers exposure to the US Large Cap Equity market by investing equal proportions in each of the 10 Select Sector SPDRs and rebalances quarterly,&rdquo; <a href="http://www.alpsfunds.com/overview/EQL">according to ALPS</a>.
EQL holds 10 of the 11 sector SPDR ETFs, including the Health Care Select Sector SPDR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlv#NYSE">XLV</a>), Technology Select Sector SPDR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlk#NYSE">XLK</a>) and the Financial Select Sector SPDR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlf#NYSE">XLF</a>).
Weights of the sector SPDR ETFs in EQL range from 8.68 percent for the Utilities Select Sector SPDR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlu#NYSE">XLU</a>) to 9.24 percent for XLV, as of Dec. 31, 2018.
<h3>Why It&#39;s Important</h3>
Rare are the occasions that EQL has a comparable rating to the traditional S&amp;P 500, but <a href="http://www.altavista-research.com/">AltaVista Research</a> currently rates EQL Neutral, the same rating the research firm has on the S&amp;P 500. EQL&#39;s ALTAR score of 7.1&nbsp;percent is slightly higher than the 6.9&nbsp;percent AltaVista has on the S&amp;P 500.
AltaVista&#39;s Neutral rating implies average appreciation potential and &ldquo;indicates that valuations adequately reflect the fundamentals of stocks in these funds,&rdquo; according to the research firm.
EQL lost about 8 percent last year.
<h3>What&#39;s Next</h3>
As an equal-weight sector ETF, EQL is underweight technology relative to the S&amp;P 500 and doesn&#39;t include the Consumer Discretionary Select Sector SPDR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xly#NYSE">XLY</a>). Those features coupled with overweight positions in defensive sector ETFs, such as XLU, could help EQL if markets favor lower beta fare in 2019.
&ldquo;Equal sector weighting aims to systematically avoid the excesses of the cap-weighted benchmark (e.g. Tech bubble, Financial Crisis) making it ideal for &#39;set-it-and-forget-it&#39; investors who prefer somewhat less volatile returns,&rdquo; said AltaVista. &ldquo;And now may be a good time to make the switch: for the first time in 3 years EQL ranks higher--though just slightly--than the S&amp;P 500 SPDR. Meanwhile it maintains a bit of a value &amp; income tilt, providing some safety in volatile markets.&rdquo;
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/01/12916339/this-commodity-boasts-one-of-the-best-performing-etfs-for-ja">Silver Could Shine In January</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/01/12916360/this-etf-ended-2018-with-a-bang">This ETF Surged To End 2018 </a>

As data highlighting the consistent mediocrity, to put it kindly, of active management underscore, stock-picking is difficult. So is identifying the right sectors at the right time, but the ALPS Equal Weight Sector ETF (NYSE: <a class="ticker" href="/stock/eql#NYSE">EQL</a>) helps ameliorate that problem.

	The ALPS Equal Weight Sector ETF holds the nine sector SPDR exchange traded funds on an equal-weight basis. EQL has not yet added the Financial Services Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlfs#NYSE">XLFS</a>) and the Real Estate Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlre#NYSE">XLRE</a>), the most recent additions to the sector SPDR suite.

	As ALPS notes on the EQL website, the ETF&#39;s advantages include insulating investors from rapid deterioration in one sector while allowing for participation in broader market upside. Over the past year, EQL is down 7.5 percent compared to a 4.9 percent loss for the S&amp;P 500. Some of EQL&#39;s weakness relative to the S&amp;P 500 can undoubtedly be attributed to the ETF&#39;s nearly 10.8 percent weight to the Energy Select Sector SPDR (NYSE: <a href="http://finance.yahoo.com/q?s=XLE">XLE</a>). That means EQL&#39;s energy weight is nearly 400 basis points above that of the S&amp;P 500.

	<a href="http://altavista-research.com/">AltaVista Research</a> recently reiterated a Neutral rating on EQL, a rating that &ldquo;dictates that valuations adequately reflect the fundamentals of stocks in these funds. The majority of funds we cover fall into this category.&rdquo;

	Over the past five years, the healthcare sector, the third-largest sector weight in the S&amp;P 500, has handily outperformed the S&amp;P 1500 Composite Index, delivering better than double the returns of that broader equity benchmark. The Health Care SPDR (NYSE: <a class="ticker" href="/stock/xlv#NYSE">XLV</a>) accounts for about 10.8 percent of EQL&#39;s weight.

	&ldquo;Although equal weighting of sectors can result in faster or slower earnings growth versus the S&amp;P500 in any single year, profitability is similar on average. However equal-weighting aims to systematically avoid the excesses of the cap-weighted benchmark (such as the Financial crisis and the Tech bubble before that) making it ideal for &#39;set-it-and-forget-it&#39; investors who prefer somewhat less volatile returns,&rdquo; adds AltaVista.

	With Treasury yields declining and investors displaying an overt preference for conservative sectors, it is worth noting that EQL allocates over 24 percent of its combined weight to the Utilities Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) and the Consumer Staples Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlp#NYSE">XLP</a>).

Plenty of broad market exchange traded funds give investors to a variety of sectors, but no ETF does it quite like the ALPS Equal Weight Sector ETF (NYSE: <a class="ticker" href="/stock/eql#NYSE">EQL</a>).

	The $128.8 million ALPS Equal Weight Sector ETF, which will celebrate its seventh anniversary in early July, uses a straight forward approach. The ALPS Equal Weight Sector ETF holds the nine sector SPDR ETFs on an equal-weight basis. Currently, weights for the nine SPDRs in EQL range from 10.7 percent for the Materials Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>) to 11.7 percent for the Utilities Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>).

	Utilities stocks and exchange-traded funds faced plenty of challenges last year as the Federal Reserve set the stage for its first interest rate increase in nearly a decade. With the central bank poised to raise borrowing costs several times this year, investors should approach the utilities sector and its ETFs with caution. Sliding oil prices pinched materials stocks and ETFs, making XLB <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/01/6122349/different-ways-to-turn-the-lights-on-with-utilities-etfs">one of the worst-performing</a> sector SPDRs.

	As ALPS notes on the EQL website, the ETF&#39;s advantages include insulating investors from rapid deterioration in one sector while allowing for participation in broader market upside. Over the past year, EQL is down 7.5 percent compared to a 4.9 percent loss for the S&amp;P 500. Some of EQL&#39;s weakness relative to the S&amp;P 500 can undoubtedly be attributed to the ETF&#39;s nearly 10.8 percent weight to the Energy Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xle#NYSE">XLE</a>). That means EQL&#39;s energy weight is nearly 400 basis points above that of the S&amp;P 500.

	In a recent note, <a href="http://altavista-research.com/">AltaVista Research</a> rated EQL Neutral.

	&quot;This indicates that valuations adequately reflect the fundamentals of stocks in these funds,&quot; said the research firm.

	Though it has not been confirmed, EQL could take on a different look later this year when real estate becomes its own sector on August 31. Last year, State Street introduced the Real Estate Select Sector SPDR Fund (NYSE: <a class="ticker" href="/stock/xlre#NYSE">XLRE</a>) and the Financial Services Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlfs#NYSE">XLFS</a>) to give advisors and investors avenues for preparing for real estate becoming its own sector. The popular Financial Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>) will remain the same.

	&quot;Although equal weighting of sectors can result in faster or slower earnings growth versus the S&amp;P500 in any single year, profitability is similar on average. However equal-weighting aims to systematically avoid the excesses of the cap-weighted benchmark (such as the Financial crisis and the Tech bubble before that) making it ideal for &#39;set-it-and-forget-it&#39; investors who prefer somewhat less volatile returns,&quot; according to AltaVista.

There is something to be said for equal-weight ETFs and there is something to be said against these funds, which are part of one of the faster growing corners of the ETF universe.

In the past year, the Rydex S&amp;P 500 Equal Weight ETF (NYSE: <a class="ticker" href="/stock/rsp#NYSE">RSP</a>) has outperformed the SPDR S&amp;P 500 Trust (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) by a slim margin, but as Benzinga has noted recently, Rydex equal-weight offerings tracking the materials and technology sectors have lagged the recent performances of comparable traditional ETFs.

Still, the concept behind equal-weight equity-based ETFs is a compelling one. After all, one of the allures of ETFs is gaining exposure to multiple stocks through one fund and no one likes the nasty surprise of finding out their ETF is excessively weighted to just one or two stocks.

When the market bounces back, these five equal-weight ETFs that your broker probably forgot to tell you about could be worth taking a look at.

1) Rydex MSCI Emerging Markets Equal Weight ETF (NYSE: EWEM):
EWEM made its debut in December 2008 as the equal-weight rival to the iShares MSCI Emerging Markets Index Fund (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>) and the Vanguard MSIC Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>). Admittedly, EWEM as lagged its more popular rivals, but EWEM offers less exposure to Brazil, something that could prove beneficial in the back half of 2011.

2) ALPS Equal Sector Weight ETF (NYSE: <a class="ticker" href="/stock/eql#NYSE">EQL</a>):
This one really flies under the radar and its broken chart indicates better value can be had by waiting to initiate new positions. That said, EQL takes a unique fund of funds type of approach by combining all nine of the large-cap SPDR ETFs into one fund. Weights range from 10.57% to 11.65%. If you want to own all the SPDRs, EQL might be the best way to do that.

3) Global X SuperDividend ETF (NYSE: <a class="ticker" href="/stock/sdiv#NYSE">SDIV</a>):
SDIV is still less than two months old, but Global X found the right combination of dividend payers and the equal-weight approach with this ETF. Home to 100 stocks, each receiving a weight of 1%, SDIV has accumulated over $30 million in assets under management and maintains decent liquidity at nearly 108,000 shares per day. The only knock here is the ETF is trading near a new low as of this writing. Still, SDIV is a sound idea in a cooperative market and may be offering some value here.

4) Rydex S&amp;P 500 Equal Weight Consumer Discretionary ETF (NYSE: <a class="ticker" href="/stock/rcd#NYSE">RCD</a>):
Yes, it is hard to advocate discretionary ETFs of any variety in this environment of high unemployment and slack economic growth, but if discretionary names get a boost, investors would do well to remember that RCD has slightly outperformed the Consumer Discretionary Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xly#NYSE">XLY</a>) recently.

5) Rydex S&amp;P 500 Equal Weight Utilities ETF (NYSE: <a class="ticker" href="/stock/ryu#NYSE">RYU</a>):
There is no shame in playing some defense these days and utilities are one way to do that. The shame would be opting for the Utilities Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) over RYU because the latter has sharply outpaced the former over the past year.

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<a rel="attachment wp-att-16232" href="http://etfdailynews.com/blog/2010/07/27/equal-sector-etf-marks-its-1st-anniversary-by-beating-the-sp-500-eql/alps-advisors_thumbnail/"><img class="alignleft size-full wp-image-16232" title="ALPS-Advisors_thumbnail" src="http://etfdailynews.com/blog/wp-content/uploads/2010/07/ALPS-Advisors_thumbnail.jpg" alt="" width="110" height="92" /></a>Equal Sector investing notched another victory earlier this month when the ALPS Equal Sector Weight Exchange Traded Fund (“ETF”) (NYSE: EQL) outperformed the S&amp;P 500 Index in its first(...) Read the rest of <a href="http://etfdailynews.com/blog/2010/07/27/equal-sector-etf-marks-its-1st-anniversary-by-beating-the-sp-500-eql/">Equal Sector ETF Marks Its 1st Anniversary By Beating the S&amp;P 500 (EQL)</a> 
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Equal Sector ETF Marks Its 1st Anniversary By Beating the S&P 500 (EQL)

<a rel="attachment wp-att-16232" href="http://etfdailynews.com/blog/2010/07/27/equal-sector-etf-marks-its-1st-anniversary-by-beating-the-sp-500-eql/alps-advisors_thumbnail/"><img class="alignleft size-full wp-image-16232" title="ALPS-Advisors_thumbnail" src="http://etfdailynews.com/blog/wp-content/uploads/2010/07/ALPS-Advisors_thumbnail.jpg" alt="" width="110" height="92" /></a>Equal Sector investing notched another victory earlier this month when the ALPS Equal Sector Weight Exchange Traded Fund (“ETF”) (NYSE: <a class="ticker" href="/stock/eql#NYSE">EQL</a>) outperformed the S&amp;P 500 Index in its first(...) Read the rest of <a href="http://etfdailynews.com/blog/2010/07/27/equal-sector-etf-marks-its-1st-anniversary-by-beating-the-sp-500-eql/">Equal Sector ETF Marks Its 1st Anniversary By Beating the S&amp;P 500 (<a class="ticker" href="/stock/eql#">EQL</a>)</a> 
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IndexUniverse posted an <a href="http://www.indexuniverse.com/hot-topics/7499-william-bernstein-wild-ride-hasnt-changed-verities-of-investing.html">interview with William Bernstein</a> who is known for strong beliefs in index investing and has written several books. In there he made two points that I would strenuously disagree with.
First he reiterated a point that many indexers make that I think is overly academic as he noted that "passive still beats active in the long run because it has to by mathematical certainty." I believe this ignores way too many variables to be useful for most folks.
I have heard versions of this argument that focus on management fees (based on the article this was Bernstein's point) and other versions that focus on there only being so much alpha out there.
It is not clear to me what Bernstein thinks of as long term but most indexers are talking about market cap weighting. If you recall last summer the ALPS Equal Sector Weight ETF (EQL) came out with a ten year back test of beating the regular cap weighted S&amp;P 500. It should be noted that the ten year period backtested for EQL was probably the best possible time for such a thing because of excess and subsequent fallout of the tech sector and then the financial sector. I would also concede that Bernstein probably thinks long run is longer than ten years and I would not disagree with that but ten years of outperformance is a long time.
I believe I have made a reasonably compelling case on this site in the last few years for the importance of correctly avoiding a given sector or country. It does not take a lot of acumen to see that an S&amp;P 500 sector is greater than 20% of that index which is a huge warning sign and easy to heed. Realizing that a country is on shaky ground takes a little more time but most certainly does not require a PHD.
Bernstein's point also ignores the fact that active management is a series of decisions; some right and some wrong. In this light success depends on being right a little more often than you are wrong. If the wrongs can be mitigated one way or another and the rights do well there is a good chance of outperforming. This point is difficult to win the argument with but as a supporting factor a stock I have been writing about for more than five years is Vale (VALE) which is a client holding. Vale as a proxy for materials is up 350% versus about 25% for the Materials Sector SPDR (XLB) in the last five years. This just an example which has flaws of its own but one (mega cap) stock pick combined with one sector avoided (the financials) and an investor would be noticeably ahead of the market for a decent chunk of time, that being five years.
I will say it is very reasonable to question how many people should be making a lot of active decisions in the market. People tend to not understand the volatility they have taken on until after a big decline resulting in panic sales so I am not saying everyone should be actively managing their portfolio but the idea of "has to by mathematical certainty" seems far too simplistic. I won't go into detail on another point here so the at post is not too long but another variable is the occasional buying and selling of stocks or funds that can add value as opposed to what I believe is a static portfolio in Bernstein's comments.
Bernstein also has choice words for levered and inverse ETFs, "But in practice, they’re being used as speculative tools. Some of them are silly, some are dangerous, and some, such as inverse and leveraged ETFs, are downright criminal" noting that they do not "work" over longer periods of time. He adds "what is this concept that an investment can only be used for one day? This is not an investment. Who has the predictive power of knowing which way the market is going to go on one day?" and finally "To the extent that people are using them more for speculation than for long-term investment, it’s a horrible thing."
I would not disagree with an opinion that says many people will misuse a levered fund but speculation plays an important role in the functioning of capital markets. I think this is a rather elementary point actually--markets need liquidity to function and speculators are a source of liquidity. Again any argument that says most people should not be speculating is one I would agree with but the framing that speculation is a bad thing and tools that facilitate speculation are bad things is, again, too simplistic.
To the extent new investors are trying to learn and seek out Bernstein as a source I believe they are learning the wrong thing. There is a difference between a fund being "downright criminal" and a fund simply being unsuitable for many people. 
<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/8532070-2539350165890104190?l=randomroger.blogspot.com' alt='' /></div>

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