The start of 2026 has seen a shift away from tech and the “Magnificent Seven” stocks, with cyclicals and small caps gaining traction due to concerns about the labor market and geopolitics. Equal-weighting the S&P 500 allows for better market rotation capture while maintaining large-cap exposure.
Tech stocks are lagging behind the S&P 500, while industrials, energy, and defensive sectors are outperforming. Small caps have already surpassed large caps by over 7% in 2026. Investors may need to reconsider their strategies focused on tech and growth due to increasing uncertainty.
The Invesco S&P 500 Equal Weight ETF invests in all S&P 500 components equally, providing a way to diversify large-cap exposure beyond tech. With an annual fee of 0.20%, it offers a balanced approach to navigate the current market landscape.
The concentration of the “Magnificent Seven” stocks accounts for about 35% of the S&P 500, raising concerns about overreliance on a few companies for index performance. The S&P 500 is trading at around 22 times forward earnings, with the Magnificent Seven collectively at 27 times earnings, indicating high valuations.
The equal-weight S&P 500 includes a modest 13% tech exposure, making it the third-largest sector holding. With a focus on industrials, financials, healthcare, and consumer discretionary sectors, investors get a more rounded exposure to various market segments beyond tech.
The market rotation in 2026 has favored small caps, benefiting midsize companies within the index as well. The Invesco S&P 500 Equal Weight ETF offers a broader large-cap exposure that aligns with the current market dynamics, potentially capturing future market trends.
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Disclaimer: The author and Motley Fool do not hold positions in mentioned stocks. The Motley Fool has a disclosure policy. “1 Top ETF to Load Up on in 2026” was originally published by The Motley Fool.
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