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July 23, 2009 at 08:00 PM
The ALPS Equal Sector Weight ETF (EQL) has just launched. The new fund is an ETF of ETFs that delivers exposure to the U.S. large-cap equity market by investing equal proportions in each of the nine Select Sector SPDRs.
The nine Select Sector funds are: the Consumer Discretionary Select Sector SPDR Fund (XLY), Consumer Staples Select Sector SPDR Fund (XLP), Energy Select Sector SPDR Fund (XLE), Financial Select Sector SPDR Fund (XLF), Health Care Select Sector SPDR Fund (XLV), Industrial Select Sector SPDR Fund (XLI), Materials Select Sector SPDR Fund (XLB), Technology Select Sector SPDR Fund (XLK) and Utilities Select Sector SPDR Fund (XLU).
EQL is benchmarked to the Banc of America Securities-Merrill Lynch Equal Sector Weight Index. It owns each of the nine Select Sector SPDR ETFs in equal weights. The nine Select Sector SPDR ETFs are rebalanced back to equal weight on a quarterly basis.
“Most equal-weight indexes are based at the stock level,” says Jeremy Held, ALPS director of product research. “EQL is an important extension of the equal-weight concept in that it addresses sector risk, which we consider to be a much more important and fundamental risk to client portfolios than individual stocks.
