The Invesco S&P 500 Equal Weight ETF (RSP) has gained about 12% year-to-date, outperforming the cap-weighted SPDR S&P 500 ETF's 10% rise. This performance reverses recent mega-cap dominance, with RSP's portfolio heavily tilted towards semiconductor stocks rather than the usual tech giants like Apple or Microsoft. The fund's success is influenced by the shape of the yield curve, where a steepening curve favors smaller-cap and cyclical stocks that RSP overweights. The upcoming quarterly rebalance will reduce the semiconductor overweight and increase exposure to lagging sectors, potentially shifting the fund's performance dynamics. Investors should watch the 10-year minus 2-year Treasury yield spread and the Fed's rate cut signals to gauge RSP's future advantage over cap-weighted ETFs.
