The S&P 500’s concentration problem just cost investors 5 percentage points in 2026

The Invesco S&P 500 Equal Weight ETF (RSP) has returned +1% year-to-date in 2026, while the SPDR S&P 500 ETF Trust (SPY) is down 3%. That 5-percentage-point gap is not random. It is the cost of concentration in a market where a narrow group of mega-cap tech names has turned into a liability.

SPY’s top 10 holdings now represent a historically outsized share of the index. When those names — Apple, Microsoft, Nvidia — face pressure, the entire portfolio feels it. The fund assumes broad diversification, but its returns are effectively steered by a handful of stocks.

RSP avoids that bet. It holds the same 500 companies but assigns each an equal weight, rebalancing quarterly to maintain balance. That mechanical discipline trims winners and adds to laggards, enforcing a buy-low, sell-high rhythm that cap-weighted indexes cannot replicate.

The sector results show the divergence. In SPY, tech dominates at over 30%. In RSP, Information Technology makes up 14%, while Industrials and Financials each claim 15% or more. Apple, Microsoft, and Nvidia carry the same weight as a mid-sized industrial or regional bank.

That flattening insulated RSP from the tech-led pullback. It also explains why RSP outperformed SPY by nearly 5 percentage points in 2026’s broad-market environment — one where equal weighting, not mega-cap momentum, became the edge.