Short answer: A market-cap index fund puts more money into bigger companies, while an equal-weight fund puts the same amount into each one: the ten largest S&P 500 companies made up 37.9% of a regular S&P 500 fund as of June 30, 2026, but only about 2% of an equal-weight version. Equal weight costs more (0.20% a year for the largest equal-weight S&P 500 ETF vs 0.03% for VOO, per their 2026 fund documents) and trades far more.
Put $1,000 into an S&P 500 index fund and about $75 of it goes into a single company. Another $66 goes into a second one. By the time you’ve counted ten companies, you’ve used up $379, and the other 490 or so share what’s left.
That’s how most index funds work, and it’s by design. But there’s another way to build the same fund: give every company the same slice. In an equal-weight S&P 500 fund, your $1,000 puts about $2 into each company, whether it’s the biggest business in the world or number 500 on the list.
Same companies, very different fund. Here’s how the two approaches work, what each has cost and returned, and what the filings funds make with the Securities and Exchange Commission (SEC) show about the equal-weight funds you can actually buy.
Two ways to weight the same list
An index is a list of companies plus a rule for how much of each to hold. The rule matters as much as the list.
Market-cap weighting is the standard. Investor.gov, the SEC’s investor education site, explains it like this: “In a market-cap-weighted index, securities with a higher market capitalization value account for a greater share of the overall value of the index” (Investor.gov). A company worth ten times as much gets ten times the weight. The S&P 500, the total stock market indexes and nearly every fund we’ve covered on this site work this way.
Equal weighting ignores size. S&P Dow Jones Indices describes its version, the S&P 500 Equal Weight Index, as including “the same constituents as the capitalization weighted S&P 500, but each company in the S&P 500 EWI is allocated a fixed weight – or 0.2% of the index total at each quarterly rebalance” (S&P Dow Jones Indices). The index launched in January 2003.
That phrase “at each quarterly rebalance” is the key to everything that follows. Stock prices move every day, so the weights drift apart as soon as they’re set. Four times a year the index resets them, which means selling a little of whatever went up and buying a little of whatever went down.
How concentrated the regular S&P 500 has become
The case for equal weighting gets louder when the big companies get bigger, and right now they’re very big.
At the end of June 2026, the ten largest holdings of Vanguard’s S&P 500 ETF made up 37.9% of the fund, and the largest single company, NVIDIA, was 7.5% on its own. Technology companies as a sector were 38.0% (Vanguard fact sheet).
In an equal-weight fund, ten companies are about 2% of the fund, by simple arithmetic: ten slices of 0.2% each.
| Market-cap S&P 500 fund | Equal-weight S&P 500 fund | |
|---|---|---|
| Largest single company | 7.5% | about 0.2% |
| Ten largest companies | 37.9% | about 2% |
| Of $1,000, amount in the largest company | about $75 | about $2 |
Market-cap figures from Vanguard’s S&P 500 ETF fact sheet as of June 30, 2026. Equal-weight figures are the index’s target weights at each rebalance; between rebalances they drift.
Neither column is “right”. The market-cap fund holds companies in proportion to what investors as a whole think they’re worth. The equal-weight fund makes a different bet: that being number 400 on the list deserves as much of your money as being number one.
What we counted
We wanted to know how big equal weighting really is among index funds. Using each fund’s most recent annual report to the SEC (Form N-CEN) filed between the third quarter of 2025 and the second quarter of 2026, we looked for index funds with “equal weight” in the name, leaving out leveraged and inverse funds. It’s the same census behind our count of how many index funds there are.
| Equal-weight index funds | |
|---|---|
| Funds in our count | 25 |
| Of which ETFs | 25 |
| Total assets | about $83 billion |
| Share of all index fund assets | about 0.5% |
| Held by the single largest fund | about 80% |
| Median expense ratio | 0.40% |
Our calculations from SEC Form N-CEN and prospectus fee data. The grouping is by fund name and is approximate; it includes equal-weight sector, Nasdaq-100 and other versions, not only S&P 500 funds.
Three things are worth noticing.
First, it’s tiny. For all the attention it gets, equal weighting is about half a cent of every dollar in index funds.
Second, it’s really one fund. The Invesco S&P 500 Equal Weight ETF holds about four-fifths of all the money. Most of the other 24 are narrow versions: one sector, or one small slice of the market.
Third, every one of them is an ETF. That’s not a coincidence, and the reason comes up below under taxes.
What equal weight costs
The median equal-weight index fund in our count charges 0.40% a year. The median for all index funds is 0.32%. But the comparison that matters is with a plain S&P 500 fund, and there the gap is wide.
| Vanguard S&P 500 ETF (VOO) | Invesco S&P 500 Equal Weight ETF (RSP) | |
|---|---|---|
| Expense ratio | 0.03% | 0.20% |
| Portfolio turnover | 2.4% | 27% |
| Number of companies | about 500 | about 500 |
Sources: Vanguard fact sheet as of June 30, 2026; Invesco summary prospectus dated August 28, 2026.
On $10,000, 0.20% is $20 a year instead of $3. That’s still cheap by the standards of the fund industry, but it’s nearly seven times the price, for the same 500 companies. As we found when we compared what S&P 500 funds charge, the list of companies tells you little about the cost.
The second row is the bigger difference. Turnover measures how much of the portfolio a fund replaces in a year. A market-cap fund barely has to trade: when a stock rises, its weight in the index rises with it, so the fund already holds the right amount. An equal-weight fund has to trade every quarter to pull the weights back into line.
S&P’s own research put numbers on this in 2023: “the S&P 500 Equal Weight Index had an average one-way turnover of 22% per year over the past 10 years, compared to just 5% for the S&P 500” (S&P Dow Jones Indices, 2023).
Trading isn’t free. Invesco’s prospectus says so directly: “A higher portfolio turnover rate will cause the Fund to incur additional transaction costs and may result in higher taxes when Shares are held in a taxable account” (Invesco summary prospectus). Those trading costs don’t appear in the expense ratio; they show up as slightly lower returns.
Which has done better?
It depends entirely on when you look, and this is where equal weighting is most often oversold.
Over the last ten years, market-cap weighting won clearly. Invesco’s prospectus reports average annual returns for the periods ended December 31, 2025:
| 1 year | 5 years | 10 years | |
|---|---|---|---|
| S&P 500 Index | 17.88% | 14.42% | 14.82% |
| S&P 500 Equal Weight Index | 11.43% | 10.48% | 11.71% |
| Invesco S&P 500 Equal Weight ETF, before taxes | 11.25% | 10.25% | 11.46% |
Source: Invesco S&P 500 Equal Weight ETF summary prospectus, August 28, 2026. Index returns reflect no fees, expenses or taxes.
Three percentage points a year for ten years is a lot. By our arithmetic, $10,000 growing at the S&P 500’s rate would have become about $39,800; at the equal-weight index’s rate, about $30,300. The reason is no mystery: the decade belonged to a handful of giant technology companies, and an equal-weight fund held about the same small slice of each of them as of everything else, while the regular fund’s stake in them kept growing.
Over the longer run, equal weight was ahead. S&P’s 20-year review found that from the index’s launch in January 2003 to April 30, 2023, the equal-weight index returned 11.48% a year against 10.29% for the S&P 500. And in single years it can win big: S&P notes that in 2022, when many large growth stocks struggled, the equal-weight index beat the S&P 500 by about 7% (S&P Dow Jones Indices).
So the honest scoreboard reads: ahead over one stretch, well behind over another. Anyone showing you only one of those periods is selling something.
Why the results differ
An equal-weight fund isn’t a “fairer” S&P 500. It’s a fund with three built-in tilts.
It leans toward smaller companies. Giving company number 450 the same weight as company number one means holding far more of the smaller names than the market does. S&P says that this tilt “has accounted for over 50% of the S&P 500 Equal Weight Index’s excess return historically”. These aren’t truly small companies, though. Invesco’s prospectus says the index’s members ranged from $5.2 billion to $4.8 trillion in market value in mid-2026. If it’s small companies you want, a small-cap index fund does that job directly.
It leans toward cheaper stocks and against recent winners. In S&P’s words, the index “tends to lean toward value stocks and against momentum”. Every rebalance trims what has just gone up and adds to what has just gone down. In a market that keeps rewarding the same winners year after year, that’s a drag. In a market that turns, it helps.
Its sectors look different. Technology was 38% of the regular S&P 500 in mid-2026 because technology companies are enormous. In an equal-weight fund, each sector’s share depends on how many companies it has, not on how big they are, so technology shrinks and sectors with many mid-sized companies, such as industrials, grow.
Put together, an equal-weight fund is a bet that the biggest companies won’t keep pulling away from the rest. Sometimes that bet pays. Over the last decade it didn’t.
Taxes
All that rebalancing means an equal-weight fund is constantly selling shares that have risen, which is exactly what creates taxable gains inside a fund.
That’s where the ETF structure earns its keep. ETFs can usually hand off appreciated shares without selling them, which keeps most of those gains from being paid out to shareholders. It’s the likeliest reason all 25 equal-weight index funds in our count are ETFs. We explain the mechanism in our article on capital gains distributions.
Dividends are still taxed each year either way. Invesco’s prospectus shows the effect: after taxes on distributions, the fund’s ten-year return drops from 11.46% to 10.92% a year for an investor in the highest federal bracket. If you hold an equal-weight fund in an IRA or 401(k), none of this matters until you withdraw.
Who might want one, and who shouldn’t bother
It can make sense if you’re uneasy about having well over a third of your U.S. stock money in ten companies and want to hold some of it differently; you understand you’re making a bet against the largest companies and can live with trailing the S&P 500 for years; and you’re prepared to pay about 0.20% for it.
It probably doesn’t if you want the market’s return at the lowest cost, since that is precisely what a market-cap fund delivers; you’d be tempted to switch back after a stretch of lagging, which locks in the worst of both; or you’re choosing it because of one good year.
There’s also a middle path that doesn’t require a special fund. If concentration worries you, holding a total stock market fund or adding international and bond funds spreads your money across far more than ten companies, at a fraction of the cost.
And if you do split your money between the two, remember they hold the same 500 companies. An equal-weight fund doesn’t add anything new to an S&P 500 fund. It changes the proportions.
A few common questions
Is an equal-weight fund less risky? Not in the usual sense. It’s less exposed to any one company, but it holds more in smaller, more volatile ones. In the first quarter of 2020 Invesco’s fund fell 26.63%, the worst quarter shown in its prospectus.
Is 0.20% a lot? It’s low for a specialized fund and high for an S&P 500 fund. Our guide to expense ratios shows what a difference like that adds up to over decades.
Are there equal-weight funds for other indexes? Yes: for the Nasdaq-100, the Russell 1000, individual sectors and others. They’re small, and many cost 0.40% or more.
Does equal weighting fix concentration? It removes concentration in the largest companies. It doesn’t remove risk, and it swaps one kind of bet for another.
What to take from this
Market-cap and equal-weight funds can hold the identical list of companies and still behave like different investments. The market-cap version is cheaper, trades less and has won comfortably over the past ten years. The equal-weight version spreads your money evenly, costs about seven times as much, trades far more, and has had long periods both ahead and behind.
In SEC filings, equal weighting turns out to be a niche: 25 index funds, about $83 billion, most of it in one ETF. For most people a plain, cheap, market-cap index fund remains the default. An equal-weight fund is a reasonable choice only if you know which bet you’re making and are willing to wait out the years when it doesn’t work.
This article is general information based on public filings, not personal investment advice. See our Financial Disclaimer.
Sources and data notes
- SEC, Form N-CEN data sets, 2025 Q3 to 2026 Q2, and Mutual fund prospectus risk/return summary data sets: number, assets and expense ratios of equal-weight index funds. Each fund’s most recent report; money market, leveraged and inverse funds excluded. The grouping by fund name, the shares, the medians and the dollar examples are our own calculations. Our editorial methodology explains how we count.
- SEC, Investor.gov, Index Funds: how market-cap-weighted indexes work.
- S&P Dow Jones Indices: S&P 500 Equal Weight Index (weighting and rebalancing); S&P 500 Equal Weight Index FAQ (size, value and momentum tilts; 2022); More Equal than Others: 20 Years of the S&P 500 Equal Weight Index, June 2023 (launch date, returns since launch to April 30, 2023, and turnover).
- Invesco S&P 500 Equal Weight ETF, summary prospectus dated August 28, 2026, on SEC EDGAR: expense ratio, turnover, size range of index members, worst quarter, and average annual returns to December 31, 2025, for the fund and both indexes.
- Vanguard S&P 500 ETF, fact sheet as of June 30, 2026: ten largest holdings, sector weights, turnover and expense ratio.
Data as of the 2026 Q2 SEC data sets. Sources checked on October 6, 2026.