S&P Equal Weight ETF's - Stocktrades Canada

Hello:

Perhaps a suggestion for a future ETF podcast. But with the Magnificent 7 leading the pack there will come a day when they don’t. As an investor do you think it would be worth splitting any investment into the S&P into an equal weighted fund like RSP. I am concerned that when the mag 7 interest wanes it will drive down the value of ETF’s like VOO that are heavily weighted with these companies. Maybe a 50/50 split when investing in the S&P. Any thoughts or suggestions?

Marked as spam

Asked on February 26, 2024 11:51 am

49 views

▲

▼

✔

Private answer

You are correct in the fact that if tech interest fades the S&P 500 will likely struggle due to the Mag 7 allocations it has now.
Ultimately this all boils down to personal preference and your outlook on the Mag 7. Even though over the last 20 years equal weighting the S&P 500 has proven to be a better investment than something like SPY, the Mag 7 runup over the last decade has caused a normal weighted allocation to outperform.
If Mag 7 struggles, it's pretty easy to see the path to an equal weight outperforming, just because of how much these companies make up of the S&P 500 now.
I'd be fine with purchasing a normal S&P 500 ETF, primarily because my time horizon is long and even though I could realistically see the Mag 7 going through a bit of a correction here, I still think they are going to be dominant forces for many decades.
But if my time horizon was shorter, my outlook on the Mag 7 was particularly bearish, or just overall my risk tolerance wasn't high enough to risk having that concentration in the companies, I'd be going equal weight.

Marked as spam

Posted by Dan Kent

Answered on February 28, 2024 12:01 pm

« Back to Previous Page