Equal-weight S&P 500 is leading the 2026 market and its flagship trade just hit $100 billion

Equal-weight ETFs are having a moment. The investing approach isn't new, but it has moved into the spotlight this year as many of the large-cap stocks that have driven a disproportionate share of core stock market index performance in recent years have lagged. Allocating to equal-weight ETFs — which give every company in the underlying index the same share, rather than market-weight ETFs that mirror the core index itself — enables investors to maintain exposure to the market while addressing concerns around concentration risk.

The Invesco S&P 500 Equal Weight ETF ( RSP ), the oldest, largest, and most popular ETF using this approach, leads a fairly small pack of roughly 30 equal-weight ETFs that invest across broad market indexes and more narrowly defined sectors. It has attracted more than $12 billion this year, driving assets under management over $100 billion for the first time as it has edged out the market-weighted S&P 500 in performance year-to-date, by roughly 3% through August 21.

"All of a sudden, people are paying attention," said Cinthia Murphy, director of research at VettaFi, noting the equal-weight strategy can be forgotten when the market is led by a very narrow theme, as it had been in recent years when the Magnificent 7 were posting outsized returns. The Mag 7 — a group of mega-cap U.S. technology and growth companies that comprises Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla — collectively make up roughly one-third of the S&P 500. As a block, these companies dominated the U.S. market for years. More recently, however, the group has cooled off as heavy AI-related capital spending has weighed on investor sentiment. The Mag 7 posted flat performance in the first half of 2026, compared to gains of 9.3% for the S&P 500.

"Investors have grown increasingly concerned about the concentration risk embedded in major indices such as the S&P 500, where the top 10 names account for nearly 40% of the index. This exposure is particularly concentrated in the AI theme and the major hyperscalers, where investors are raising questions about elevated valuations and whether the heavy capital spending will ultimately be justified," said Nathan Geraci, president of NovaDius. "At the same time, market performance has broadened beyond the mega-cap names, with a wider range of sectors and market segments participating in the rally. … Equal weighting solves the problem of concentration risk and allows investors to participate more fully if market leadership continues to broaden," he added.

RSP and its peers still have a long way to go to catch up to the mega S&P 500 funds. The three biggest ETFs of all — Vanguard S&P 500 ETF ( VOO ), iShares Core S&P 500 ETF ( IVV ) and State Street SPDR S&P 500 Trust ( SPY ) — have close to $3 trillion in assets between them, led by VOO's roughly $1 trillion.