"When investors buy the S&P 500, they assume they're getting balanced exposure to America's largest companies. But SPDR S&P 500 ETF Trust ( NYSEARCA:SPY) delivers something different: a portfolio where technology commands over one-third of assets, and the top three holdings represent more than 20% of the fund. For investors seeking actual sector balance, ALPS Equal Sector Weight ETF ( NYSEARCA:EQL) treats all eleven S&P 500 sectors equally, regardless of market capitalization."
"SPY's market-cap weighting creates dramatic concentration. Technology receives 34.2% allocation while energy gets just 2.8%. This structure amplifies whatever sectors are winning, letting profits compound as successful companies grow larger. The fund's $700 billion in assets and 0.09% expense ratio make it the default choice for passive investors. EQL holds equal positions in eleven sector-specific ETFs. Technology gets the same 9.1% allocation as utilities, energy, and materials."
SPY is a market-cap-weighted ETF where technology comprises about 34.2% of assets and the top three holdings exceed 20% of the fund, producing significant concentration. SPY benefits from compounding of winners and holds roughly $700 billion with a 0.09% expense ratio. EQL allocates equal weights across eleven S&P 500 sectors, giving technology about 9.1% alongside utilities, energy, and materials, reducing sector dominance and providing defensive diversification. Over ten years SPY returned 234% versus EQL's 217%, while five-year and year-to-date gaps narrowed. EQL charges 0.27% and yields 1.69% versus SPY's 1.03%.
Read at 24/7 Wall St.
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