ETFs: Alternatively Weighted Investments

DEFINITION

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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Alternatively Weighted Exchange Traded Funds are designed to track an index that is constructed based on criteria other than market capitalization (the methodology used for most traditional indexes).

Instead, alternatively weighted indexes select and weight securities based on other factors, such as growth, valuation, and price momentum, among others. Examples include:

  • Invesco S&P 500 Equal Weight ETF (NYSEARCA: RSP)
  • SPDR Technology ETF (NYSEARCA: XNTK)
  • First Trust NYSE Arca Biotechnology Index Fund (NYSEARCA: FBT)
  • Amplify Online Retail ETF (NASDAQ: IBUY)
  • iShares MSCI USA Equal Weighted ETF (NYSEARCA: EUSA)
  • ALPS Equal Sector Weight ETF (NYSEARCA: EQL)

These may also be known as “smart beta” funds.

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