Why I still love Rydex S&P Equal Weight ETF RSP
Traditional indexing is based upon the capitalization of companies. The larger the capitalization of a company, the larger its allocation into the S&P 500. Exxon, represents 4% of the S&P 500 for example. A move in the MEGA cap companies dominates the S&P. As a matter of fact the Dow Jones Industrial Average represents 2/3 of the total market cap of the NYSE. The titans dominate the indexes.
Look at the corrilation over nearly 40 years
Looks about the same, 1400% vs 1360% since 1970
An other complaint about the S&P500 is that it over weights growth stocks with higher P/E, they end up with a larger capitalization. Less value, more growth. Some would say buying high and selling low
I like the RSP because it equal weights and rebalances quarterly, giving no squew to value or growth. It also gives more weighting to the mid-cap stocks as they hold the same value as mega or large caps.
Check it out....
and...
Go get some risk and take a look at RSP.
Look at the corrilation over nearly 40 years
Looks about the same, 1400% vs 1360% since 1970
An other complaint about the S&P500 is that it over weights growth stocks with higher P/E, they end up with a larger capitalization. Less value, more growth. Some would say buying high and selling low
I like the RSP because it equal weights and rebalances quarterly, giving no squew to value or growth. It also gives more weighting to the mid-cap stocks as they hold the same value as mega or large caps.
Check it out....
and...
Go get some risk and take a look at RSP.
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