Author Topic: S&P 500 ETF question  (Read 1850 times)

OracleOfAtown

  • 5 O'Clock Shadow
  • *
  • Posts: 22
S&P 500 ETF question
« on: December 11, 2014, 11:38:20 PM »
Does anyone else out there invest in Guggenheims equal weighted S&P 500 ETF.  (RSP)
Seems to me that there would be a little more upside if all the stocks were equally weighted so the smaller cap stocks would have more of impact than a normal S&P 500 index. I was thinking about buying in my Roth IRA but wanted to get some input from some savvy investors first.

MDM

  • Walrus Stache
  • *******
  • Posts: 9607
Re: S&P 500 ETF question
« Reply #1 on: December 11, 2014, 11:49:45 PM »
Pros and cons to equal weight indexing.  E.g. see https://www.bogleheads.org/forum/viewtopic.php?f=10&t=151942&newpost=2278691 and links therein.

Bbqmustache

  • Stubble
  • **
  • Posts: 221
  • Age: 2014
    • Financial Literacy Conversations
Re: S&P 500 ETF question
« Reply #2 on: December 12, 2014, 02:36:36 AM »
Consider Fundamental Index investing instead!  From the Schwab site:  "The basis of the Funds' methodology is this: Cap-weighted indices have a tendency to overweight overpriced stocks and underweight undervalued ones, thereby creating a performance drag. By avoiding this potential shortcoming, the Fundamental Index® methodology offers a complement to traditional cap-weighted indexing and active management, helping to create more attractive risk-adjusted portfolios."  Here's one for small cap companies:  https://www.schwabfunds.com/investmentStrategy.asp?view=equity&fund=fundamentalIndexUSSmall

$100 to start out, .35% fees, buy and hold, buy and hold.  Boy do I miss Schwab

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1211
  • Age: 39
  • Location: Texas
Re: S&P 500 ETF question
« Reply #3 on: December 12, 2014, 07:51:38 AM »
The key is will the outperformance of the strategy overcome the higher fees?

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: S&P 500 ETF question
« Reply #4 on: December 12, 2014, 07:55:20 AM »
Does anyone else out there invest in Guggenheims equal weighted S&P 500 ETF.  (RSP)
Seems to me that there would be a little more upside if all the stocks were equally weighted so the smaller cap stocks would have more of impact than a normal S&P 500 index. I was thinking about buying in my Roth IRA but wanted to get some input from some savvy investors first.

You don't need the same level of exposure to small caps as you do to mid and large caps, unless you are alright with some extreme volatility.

Most with a long horizon (20+ years) could stomach some extra risk, but small caps don't necessarily outperform large caps by a wide margin.

Regardless, however you want to invest is up to you. If you want additional small cap exposure, why not just get a normal (cheap) S&P index fund and then separately add to a small cap fund?