In a market environment fraught with uncertainty, concentration risk should be mitigated when looking for sector-specific exposure. Two optimal moves in the tech and energy sector — the Invesco S&P 500 Equal Weight Technology ETF (RSPT) and the Invesco S&P 500 Equal Weight Energy ETF (RSPG) — give investors strategic, equally weighted exposure to these sectors. They do so by mitigating concentration risk that can come with funds tracking market-cap-weighted benchmarks.
Equal-weighted strategies are coming off a strong performance in January. The S&P 500’s equal weight index outpaced the broader index by 2% as market volatility struck in the opening month of 2026.
Diversifying Tech Equally
Despite recent volatility, the tech sector continues to captivate investors as artificial intelligence (AI), cloud computing, machine learning, and other disruptive tech continue to fuel growth. With that, exposure to the Select Sector SPDR Technology ETF (XLK) may seem like the default move, but its market-cap weighted strategy could translate to even more price fluctuations in an already-volatile sector.
RSPT holds the same basket of S&P 500 tech companies, but the discerning feature is the internal mechanics. XLK’s market-cap weighted strategy means the fund is dominated by household tech names (Apple, Microsoft, and Nvidia), which make up almost 40% of the fund.
On the other end of the weighting spectrum, RSPT’s strategy relies on equal weighting (roughly 1.5% to 2%) to each company in the S&P 500 Equal Weight Information Technology Index. Rather than lean heavily on big tech names, RSPT also adds exposure to mid-cap innovators in software, cybersecurity, and networking. By doing so, it gives investors more upside capture when these next generation tech companies outperform industry giants in an ever-evolving sector.
Capturing the Energy Renaissance
As mentioned, AI has certainly come to the forefront as a prime investing theme. However, it can’t run without energy. Thus, the energy sector is experiencing its own renaissance as power demands from disruptive tech reaches new heights. While alternative energy sources make headlines, structural, economic, and geopolitical factors still make traditional energy sources like oil and gas necessary.
That said, energy was the best-performing S&P sector in January. That makes exposure to funds like the Select Sector SPDR Energy ETF (XLE) ideal. However, names like ExxonMobil (XOM) and Chevron (CVX) comprise about 40% of the fund. The energy sector can be particularly volatile, especially with regard to fluctuating oil and gas prices.
To ease the stomach-churning volatility, RSPG has the elixir. Its equal weighting eliminates top-tier dominance in the S&P 500 Equal Weight Energy Plus Index. Through this equal-weighting strategy, the fund adds exposure to specialized refiners, storage companies, and independent producers alongside industry movers and shakers like Exxon or Chevron. Investors get the full spectrum of the energy ecosystem sans the volatility associated with overconcentration.
As investors get deeper into 2026, both RSPT and RSPE are essential tools for those seeking the benefits of sector growth without the vulnerability that can come with overconcentration. Both funds come with expense ratios of 40 basis points.
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