The S&P 500 has been on a roll the past three years, with double-digit gains in each. It's only the eighth time that has happened since 1926. Investors surely appreciate the S&P 500's run, but it has also made some investors cautious, wondering when the party will inevitably end. It's one of the most expensive markets in history, and many are curious if the current artificial intelligence (AI) boom is sustainable.
Nobody can predict how the market will perform this year, but if you want to stay invested in the S&P 500 while reducing risk, consider investing in the Invesco S&P 500 Equal Weight ETF (RSP 1.55%).
Image source: Getty Images.
Same index, different approach
The "issue" with the standard S&P 500 is how concentrated it has become. The index is weighted by market cap, so the larger a company is, the more of the index it accounts for. And with eight of America's 10 most valuable public companies being tech companies, they naturally make up a lot of the S&P 500. The "Magnificent Seven" stocks alone make up close to 35% of the ETF.
RSP also tracks the S&P 500, but instead of weighting companies by size, all companies in the ETF receive close to the same weight. This lets you invest in the S&P 500 without having a large piece of your investment going to a handful of companies. Here's how much the "Mag 7" accounts for the standard S&P 500 compared to RSP:
| Company | Percentage of the Standard S&P 500 | Percentage of RSP |
|---|---|---|
| Nvidia | 12.73% | 0.19% |
| Apple | 11.88% | 0.17% |
| Microsoft | 10.63% | 0.19% |
| Alphabet (Class A and C) | 9.66% | 0.20% |
| Amazon | 4.58% | 0.20% |
| Meta Platforms (Class A) | 4.26% | 0.18% |
| Tesla | 3.77% | 0.18% |
Sources: Vanguard and Invesco. Vanguard percentages as of Dec. 31, 2025. Invesco percentages as of Jan. 20.
More sectors pulling their own weight
The standard S&P 500 ETF's concentration in big tech stocks has worked out well over the past decade. Its total returns in that time are around 334%, compared to RSP's 237%. Unfortunately, this same concentration can be a burden if the stock market experiences a correction or crash.
Any tech-specific downturn will drag the whole S&P 500 down, no doubt, but the sector only accounts for around 13.5% of RSP. This doesn't mean it won't experience a rough patch as well, but it's much more diversified across sectors, helping to cushion the blow.
NYSEMKT: RSP
Key Data Points
Sectors like consumer staples and utilities tend to perform better during market crashes because they sell essential products and services, and you're getting more exposure to these companies in RSP. I'd still lean on the standard S&P 500 for the long haul, but RSP is a great supplemental safety net.
