RSPH ETF narrows valuation gap with peers, may benefit from Fed rate normalization and easing inflation.

The Invesco S&P 500 Equal Weight Health Care ETF (RSPH) has reduced its valuation gap compared to market-weight healthcare peers, with expected returns now similar to the XLV ETF. RSPH's focus on mid-cap healthcare stocks could benefit more than XLV if the Federal Reserve moves toward normalizing interest rates, potentially lowering financing costs. The ETF's volatility is close to XLV's, which limits diversification benefits from holding both. Additionally, cooling labor market data and easing energy inflation may create further buying opportunities for RSPH, supporting a positive investment view.