Home etftrends.com RYT and EWRE Offer Exposure to Rallying Tech, Real Estate Sectors

RYT and EWRE Offer Exposure to Rallying Tech, Real Estate Sectors

The technology and real estate sectors are leading the rally on Wednesday.

Technology and real estate each rose 1.7% in midday trading, as the S&P 500 is on track to climb over 1% during the day. Investors looking to overweight the tech and real estate sectors may want to consider an equal-weight approach to get more balanced exposure. Equal-weight funds offer diversification benefits, effectively limiting the impact that the largest holdings can have on the overall funds.

The equal-weight methodology of selling relative winners and buying relative losers at each rebalance introduces a slight value tilt to portfolios, something that has paid off in the current market environment.

The Invesco S&P 500 Equal Weight Technology ETF (RYT) offers exposure to the technology sector, but its underlying index utilizes an equal-weight methodology, meaning that component companies receive equal allocations at each quarterly rebalance. This results in exposure that is considerably more balanced than other alternatives. An equal-weight approach is particularly impactful in the top-heavy tech sector, which is dominated by just a handful of names.  

Year-to-date as of March 28, RYT has climbed 8.3%, while the cap-weight technology sector has climbed 16.3%. RYT is modestly outpacing the cap-weight index over a one-year period, as the cap-weight sector experienced a more dramatic decline in 2022.

The S&P 500 Equal Weight Information Technology Index covers the following industries: internet equipment, computers and peripherals, electronic equipment, office electronics and instruments, semiconductor equipment and products, diversified telecommunication services, and wireless telecommunication services. 

EWRE has declined -5.6% year-to-date, compared to the cap-weight real estate sector’s decline of -3.8% during the same period. EWRE is outpacing the benchmark by over 10% over a three-year period.

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