Rydex S&P Equal Weight ETF (RSP) Proves a Valuable Complement to Traditional Cap-Weighted Portfolios
April 28 2008 - 3:31PM
Marketwired
ROCKVILLE, MD was launched five years ago this month, and has
since demonstrated the potential diversification benefits of
alternatively-weighted strategies. As of April 25, 2008, RSP has
outperformed the S&P 500 since inception, returning 13.86%
versus the index's 10.90%. The fund has also shown better
year-to-date returns than the S&P 500, outperforming the
cap-weighted index by more than 100 basis points for the same time
period.
"Although equal weighting tends to outperform over time, there
are periods when a cap-weighted approach will do better, depending
on market conditions," says Ed Lopez, director of ETF strategies at
Rydex. "This underscores the complementary nature of a combined
cap-weight/equal weight approach to investing."
RSP provides broad market exposure by tracking the S&P Equal
Weight Index, which includes the same 500 stocks as the well-known
S&P 500. Unlike the S&P 500, which is weighted by market
capitalization, the S&P Equal Weight Index assigns an equal
weight to each of the 500 stocks, eliminating the bias toward
large-cap companies.
"From a diversification standpoint, equal weighting offers
investors inherent rebalancing of gains, as well as increased
exposure to smaller, more nimble stocks within the S&P 500,"
says Lopez. "We've seen financial professionals take advantage of
RSP's equal weight methodology to help reduce single-stock risk and
better diversify predominantly cap-weighted portfolios."
According to a new white paper by Standard & Poor's, the
S&P Equal Weight Index pioneered the development of
noncapitalization-weighted indices that cater to investors who
question market efficiency. With the number of
alternatively-weighted products on the rise, the simplicity of the
equal weight methodology has resonated with investors who are
looking for a straightforward approach to complement traditional
cap-weighted portfolios. RSP has attracted approximately $1.3
billion in assets under management and remains one of Rydex's most
popular ETFs.
(For the Periods ended 3/31/2008) YTD(1) 1-Year 3-Year Return Return SI
Return Return (4/24/2003)
Rydex S&P Equal Weight ETF (NAV) -8.66% -10.09% 5.46% 12.68%
Rydex S&P Equal Weight ETF
(Market Close) -8.91% -10.55% 5.29% 12.56%
S&P 500�(2) -9.44% -5.08% 5.85% 9.84%
Performance displayed represents past performance, which is no
guarantee of future results. Investment returns and principal value
will fluctuate so that when shares are redeemed, they may be worth
more or less than original cost. Total returns reflect the
reinvestment of all dividends. Current performance may be lower or
higher than the performance data quoted. For up-to-date fund
performance, visit our web site at www.rydexinvestments.com. For
additional information, see the fund's prospectus. (1)Partial year
returns are cumulative, not annualized. (2)The index is unmanaged
and is not available for direct investment.
About Rydex Investments
Rydex Investments continues to drive change in the financial
industry by introducing investment products and services that
challenge conventional thinking, empower investors and provide
essential new options for uncertain market conditions. Rydex
manages approximately $16 billion in assets via nearly 100 mutual
funds and exchange traded products.
For more complete information regarding Rydex ETFs, including
management fees and expenses, call 877.RYDEX34 or visit
www.rydexinvestments.com for a prospectus. Investors should
carefully consider the investment objectives, risks, charges and
expenses of a fund before investing. The fund's prospectus contains
this and other information about the fund. Please read the
prospectus carefully before you invest or send money.
ETFs are subject to risks similar to those of stocks and may not
be suitable for all investors.
Investment returns and principal value will fluctuate so that
when shares are redeemed, they may be worth more or less than
original cost. The elimination of the bias toward large-cap
companies in Rydex S&P Equal Weight ETF also lessens the impact
of large-cap gains compared to those reflected in the funds
benchmarked to the S&P 500 Index.
"S&P�," "Standard & Poor's�," "S&P 500�" and the
S&P Equal Weight Index are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by Rydex Investments
and its affiliates. Rydex S&P Equal Weight ETF is not
sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the
advisability of investing in the fund.
Rydex Distributors, Inc., an affiliate of Rydex Investments, is
the distributor of Rydex funds.
Contact: Lori Klash Winkler 301.296.5487 Email Contact
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