Invest In The Broad Market With Equal Weight ETFs [Rydex S&P Equal Weight ETF, Rydex S&P Equal Weight Industrials (ETF)]

Guggenheim S&P 500 Equal Weight Industrials ETF (NYSE:RGI) is an index that tracks the industrial sector (but not the Dow Industrials), which includes railroads, payroll processors, airlines, delivery services, aerospace, building products, construction, engineering, electrical equipment, conglomerates, defense, and waste management companies. This sector can be quite cyclical, and tied to the performance of the overall economy, so it’s a good place to be diversified on the downside.

Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (NYSE:RCD). As a consumer discretionary index, this ETF holds stocks of companies whose products get purchased when consumers have extra money lying around.  This means things like auto dealers, entertainment, electronics stores, travel and leisure, homebuilders, and newspapers.  You might compare this to theConsumer Discretionary Select SPDR ETF(NYSE:XLY).   These two ETFs have returns that are more comparable, but because the equal-weight ETF has less risk and volatility, I would prefer to choose it.

Guggenheim Russell 2000 Equal Weight ETF (NYSE:EWRS).  Here’s another index that takes the 2000 stocks from the Russell Index and gives them all equal standing.  It has very similar returns to its market-cap-weighted peers as well, but again, the reduced risk and volatility earns my vote.  You want exposure to the Russell 2000 because it covers the universe of small stocks, which outperform large ones over the long term.   There is some $4 trillion in capital that is benchmarked to this index, so you want to be tied to all that liquidity.

Guggenheim Russell MidCap Equal Weight ETF (NYSE:EWRM) takes on the stocks of mid-sized companies.  It has performed substantially better than the iShares Russell Mid-Cap ETF (NYSE:IWR) over all time periods.  I suspect this is due to the fact that all small and midsized companies in the index have an equal influence on EWRM when they grow rapidly and their stocks perform well.   A rising tide lifts all boats. Its peer, however, may find itself dominated by a few stocks that do really well, take over a huge position in the portfolio, and drown out good performance by other stocks.

Lawrence Meyers owns shares of EWRS and RSP.

This article is brought to you courtesy of Lawrence Meyers from Wyatt Investment Research.

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