Rydex Equal Weight ETFs

In 2003, the Rockville, Md.-based Rydex investments launched Rydex S&P Equal Weight (RSP), an exchange traded fund (ETF). The fund aims to invest 0.2% in each of the 500 stocks in the S&P index. The equal weighting isn't exact because stock prices are constantly shifting, but Rydex rebalances the ETF on a quarterly basis to get back to the target. The fund has amassed a respectable $1.8 billion of assets since its 2003 launch.

Most of the indexes to which ETFs are benchmarked rank individual companies according to market capitalization, thus sometimes putting too much focus to larger companies. The Energy Select Sector SDPR (XLE), for instance, has more than 36% concentrated in just two stocks: Exxon Mobil (XOM) and Chevron Corp (CVX).

Rydex is now looking to build on the success of RSP with sector-based funds with a similar strategy. Last week they introduced a few such ETFs. For example, Rydex S&P Equal Weight Energy ETF (RYE) attempts to equal-weight its 29 holdings with each stock at roughly 3.4%. Others are: Rydex S&P Equal Weight Utilities (RYU), Rydex S&P Equal Weight Consumer Discretionary (RCD), Rydex S&P Equal Weight Consumer Staples (RHS), Rydex S&P Equal Weight Financials (RYF), Rydex S&P Equal Weight Health Care (RYH), Rydex S&P Equal Weight Industrials (RGI), Rydex S&P Equal Weight Materials (RTM), Rydex S&P Equal Weight Technology (RYT), Rydex S&P Equal Weight Utilities (RYU). The new equal-weighted sector ETFs from Rydex have annual fees of 0.5% of assets.