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EQL is the equal-weighted version of the S&P 500 (XUS ETF). The S&P 500 index is a market-cap weighted index, and as companies rise in share price/market cap faster than other companies in the index, they become a larger portion of the total index. On the other hand, EQL equally-weights all 500 stocks regardless of how their share prices appreciate relative to other names in the index.
Historically, the equal-weighted S&P 500 has outperformed the market-cap weighted, but this has not been the case over the past several years, as the Magnificent 7 (mega-cap tech stocks) have widely outperformed the remaining names.
For an investor that is optimistic about breadth expansion, or sector rotation, we think the EQL can outperform the XUS, particularly on a shorter timeframe.