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Equal Weight Investing

Equal weight investing is a smart beta strategy that does exactly what its name implies—it equally weights every stock in a portfolio regardless of its market capitalization. In contrast to traditional cap-weighted approaches—where each stock is weighted based on its size (or market capitalization) and may result in increased concentration risk—equal weight investing creates unbiased exposure to all stocks. No one stock is more important than any other. Equal weighting can be applied to broad market indices, such as the well-known S&P 500® Index, as well as to sectors.

Equal Weighting the S&P 500® Index—A Case Study

Cap-Weight vs. Equal Weight Top Holdings Comparison

S&P 500® Index

 

S&P 500® Equal Weight Index

 

Select Stock Range

Equal Weight Investing Doesn’t Choose Favorites

S&P 500® Index

50 Stocks make up

49% of the index

S&P 500® Equal Weight Index

238 Stocks make up

49% of the index

Source: FactSet. As of 12.31.2017.

Historically an equal weight S&P 500® approach has outperformed a cap-weight approach due to a combination of balanced exposure and a disciplined quarterly rebalance.

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Source: FactSet. As of 12.31.2017.
Past performance does not guarantee future results. Index performance is for illustration purposes only and is not meant to represent any particular fund. Returns do not reflect any management fees, transaction costs or expenses. The index is unmanaged and not available for direct investment.

Balanced Exposure

Balanced Exposure

Provides unbiased, equal weight exposure to all stocks within the benchmark index without the domination of a small group of stocks.

Disciplined Rebalancing

Disciplined Rebalancing

Equal weight exposure is maintained through quarterly rebalancing, which imposes a buy low/sell high discipline.


10-Year Cumulative Total Return—S&P 500® Equal Weight Index vs. S&P 500® Index

 

Source: FactSet. As of 12.31.2017.
Past performance does not guarantee future results. Index performance is for illustration purposes only and is not meant to represent any particular fund. Returns do not reflect any management fees, transaction costs or expenses. The index is unmanaged and not available for direct investment.

Disciplined rebalancing may also contribute to outperformance for equal weight strategies, as equal weight allocations are regularly rebalanced to their equal weight status. This dynamic approach eliminates emotional attachment to stocks that experience price run-ups and offers a contrarian perspective via a buy low/sell high discipline.

Performance Attribution of S&P 500® Equal Weight Index

(Since Inception)

 

Rebalancing Equal weight exposure is maintained through quarterly rebalancing, which imposes a buy low / sell high discipline.

Sector Allocation More consistent exposure to sectors over time contributes to outperformance.

Source: FactSet. As of 12.31.2017. The Brinson attribution model was used with daily holdings data back to inception. The Sector Allocation component is the Allocation Effect in the attribution and the Rebalance Effect is the Selection plus Interaction Effect in the attribution. For the purpose of this analysis fees were included.


RSP The First Equal Weight ETF

Equal weight ETF investing was first introduced in 2003 with Guggenheim S&P 500® Equal Weight ETF (RSP), making Guggenheim a poineer in the strategic beta space.

Learn More

Download Exclusive Guggenheim Equal Weight Advisor Content

Learn how equal weighting can provide an alternative to traditional cap-weighted approaches for both core and tactical portfolio positions.

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Equal Weight Overview plus Quarterly Equal Weight vs. Cap-Weight Performance Comparison

Guggenheim Equal Weight ETF Investing Kit

For More Information

Call the Guggenheim ETF Knowledge Center at 888.WHY.ETFs or 888 949 3837


The broad diversification of equal weight strategies does not assure a profit or eliminate the risk of loss. Investing involves risk, including the possible loss of principal. When large-cap securities are in favor or in severe market downturns, an equal weight strategy may under perform a cap-weighted strategy. Increased exposure to smaller companies may increase volatility, and equal weight strategies could have higher portfolio turnover than cap-weighted strategies. Investing in sector funds is more volatile than investing in broadly diversified funds, as there is a greater risk due to the concentration of the funds' holdings in issuers of similar offerings.

Fund data is subject to change on a daily basis.

The Morningstar Rating for funds, or "star rating", is calculated for managed products with at least a three-year history and does not include the effect of sales charges. Exchange-traded funds and open-end mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics.

© 2016 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a subsidiary of McGraw Hill Financial, Inc., and have been licensed for use by Guggenheim Investments and its affiliates. Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. S&P Dow Jones Indices LLC (together with its affiliates, “S&P”) does not make investment recommendations, and S&P does not sponsor, endorse, sell or promote the product. S&P makes no representation or warranty regarding the advisability of investing in the product. Past performance of an index is not a guarantee of future results.

Guggenheim S&P 100® Equal Weight ETF is subject to risks and may not be suitable for all investors. • Correlation and tracking error risk refer to the factors that may affect the fund’s ability to achieve a high degree of correlation with its underlying index either on a single trading day or for a longer period of time. Failure to achieve a high degree of correlation may prevent the fund from achieving its investment objective and cause the fund’s performance to be less than you expect. • The fund is subject to the risk that the value of the equity securities and equity-based derivatives, if any, in the fund’s portfolio will decline due to volatility in the equity market. Large-capitalization stocks may underperform other segments of the equity market or the equity market as a whole. • When larger-capitalization securities are in favor or in periods of severe market dislocation, an equal weighted strategy may under-perform a cap-weighted strategy. • Shares may trade below their net asset value (NAV). The NAV of shares will fluctuate with changes in the market value of the fund’s holdings and the exchange-traded prices of the fund’s shares may not reflect these market values. Although the fund’s shares are currently listed on the exchange, there can be no assurance that an active trading market for shares will develop or be maintained. • In certain circumstances, it may be difficult for the fund to purchase and sell particular investments within a reasonable time at a fair price. • The fund is non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund; changes in the market value of a single issuer could cause greater fluctuations in the value of fund shares than would occur in a diversified fund. • The fund is not actively managed and the advisor does not take defensive positions in declining markets; therefore, the fund may be subject to greater losses in a declining market than an actively managed fund.

Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a subsidiary of McGraw Hill Financial, Inc., and have been licensed for use by Guggenheim Investments and its affiliates. Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. S&P Dow Jones Indices LLC (together with its affiliates, “S&P”) does not make investment recommendations, and S&P does not sponsor, endorse, sell or promote the product. S&P makes no representation or warranty regarding the advisability of investing in the product. Past performance of an index is not a guarantee of future results.

Guggenheim S&P MidCap 400® Equal Weight ETF may not be suitable for all investors. • An unanticipated early closing of the NYSE Arca, Inc. (the “Exchange”) may result in a shareholders inability to buy or sell Fund shares on that day. • Investments in securities, in general, are subject to market risks that may cause their prices to fluctuate over time. An investment in the Fund may lose money. Most investors will also incur customary brokerage commissions when buying or selling shares of an ETF. • Unlike many investment companies, the Fund is not actively “managed.” This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of mutual funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline. • Tracking error risk refers to the risk that the Advisor may not be able to cause the Fund’s performance to match or correlate to that of the Fund’s Underlying Index, either on a daily or aggregate basis. Tracking error risk may cause the Fund’s performance to be less than you expect. • Shares may trade below their net asset value (“NAV”). The NAV of shares will fluctuate with changes in the market value of the Fund’s holdings. In addition, although the Fund’s shares are currently listed on the Exchange, there can be no assurance that an active trading market for shares will develop or be maintained. • The Fund is subject to the risk that medium-capitalization stocks may underperform other segments of the equity market or the equity market as a whole. The Fund is considered non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single security could cause greater fluctuations in the NAV of Fund shares than would occur in a diversified fund. See the Prospectus for more details.

The Morningstar Rating for funds, or "star rating", is calculated for managed products with at least a three-year history and does not include the effect of sales charges. Exchange-traded funds and open-end mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics.

© 2016 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a subsidiary of McGraw Hill Financial, Inc., and have been licensed for use by Guggenheim Investments and its affiliates. Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. S&P Dow Jones Indices LLC (together with its affiliates, “S&P”) does not make investment recommendations, and S&P does not sponsor, endorse, sell or promote the product. S&P makes no representation or warranty regarding the advisability of investing in the product. Past performance of an index is not a guarantee of future results.

Guggenheim S&P SmallCap 600® Equal Weight ETF may not be suitable for all investors. • An unanticipated early closing of the NYSE Arca, Inc. (the “Exchange”) may result in a shareholders inability to buy or sell Fund shares on that day. • Investments in securities, in general, are subject to market risks that may cause their prices to fluctuate over time. An investment in the Fund may lose money. Most investors will also incur customary brokerage commissions when buying or selling shares of an ETF. • Unlike many investment companies, the Fund is not actively “managed.” This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of mutual funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline. • Tracking error risk refers to the risk that the Advisor may not be able to cause the Fund’s performance to match or correlate to that of the Fund’s Underlying Index, either on a daily or aggregate basis. Tracking error risk may cause the Fund’s performance to be less than you expect. • Shares may trade below their net asset value (“NAV”). The NAV of shares will fluctuate with changes in the market value of the Fund’s holdings. In addition, although the Fund’s shares are currently listed on the Exchange, there can be no assurance that an active trading market for shares will develop or be maintained. • The Fund is subject to the risk that small and medium-capitalization stocks may underperform other segments of the equity market or the equity market as a whole. See the Prospectus for more details.

Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a subsidiary of McGraw Hill Financial, Inc., and have been licensed for use by Guggenheim Investments and its affiliates. Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. S&P Dow Jones Indices LLC (together with its affiliates, “S&P”) does not make investment recommendations, and S&P does not sponsor, endorse, sell or promote the product. S&P makes no representation or warranty regarding the advisability of investing in the product. Past performance of an index is not a guarantee of future results.

Guggenheim MSCI Emerging Markets Equal Country Weight ETF may not be suitable for all investors. •An unanticipated early closing of the NYSE Arca, Inc. (the “Exchange”) may result in a shareholders’ inability to buy or sell fund shares on that day. •Investments in securities, in general, are subject to market risks that may cause their prices to fluctuate over time. An investment in the fund may lose money. Most investors will also incur customary brokerage commissions when buying or selling shares of an ETF. •Unlike many investment companies, the fund is not actively “managed.” This means that, based on market and economic conditions, the fund’s performance could be lower than other types of mutual funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline. •Tracking error risk refers to the risk that the advisor may not be able to cause the fund’s performance to match or correlate to that of the fund’s underlying Index, either on a daily or aggregate basis. Tracking error risk may cause the fund’s performance to be less than you expect. •Shares may trade below their net asset value (“NAV”). The NAV of shares will fluctuate with changes in the market value of the fund’s holdings. In addition, although the fund’s shares are currently listed on the exchange, there can be no assurance that an active trading market for shares will develop or be maintained. •The fund’s investment in foreign instruments may be volatile due to the impact of diplomatic, political or economic developments on the country in question. Additionally, investments in emerging markets securities are generally subject to an even greater level of risks. The Fund’s exposure to foreign currencies subjects the fund to the risk that those currencies will decline in value relative to the U.S. dollar. •The Fund is subject to the risk that medium and large-capitalization stocks may underperform other segments of the equity market or the equity market as a whole. See the Prospectus for more details. ETF data is subject to change on a daily basis.

The funds or securities referred to herein are not sponsored, endorsed or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The prospectus contains a more detailed description of the limited relationship MSCI has with Guggenheim Investments and any related funds.

Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objectives, risks, charges, expenses and other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available), click here or contact us

Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC ("Guggenheim"), which includes Security Investors, LLC ("SI"), the investment adviser to the referenced funds. Securities offered through Guggenheim Funds Distributors, LLC, an affiliate of Guggenheim and SI.