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Portfolio > ETFs

Rydex Unveils 6 Equal Weight ETFs

By Joyce Hanson

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Rydex announced Wednesday the launch of six new equal weight exchange traded funds that bring the firm’s total number of EW ETFs to 16.

Five of the six new Rydex ETFs began trading Wednesday on the NYSE Arca:

  • Rydex Russell 1000 Equal Weight ETF (EWRI)
  • Rydex Russell 2000 Equal Weight ETF (EWRS)
  • Rydex Russell Midcap Equal Weight ETF (EWRM)
  • Rydex MSCI EAFE Equal Weight ETF (EWEF)
  • Rydex MSCI Emerging Markets Equal Weight ETF (EWEM)

In addition, the Rydex MSCI All Country World (ACWI) Equal Weight ETF (EWAC) is estimated to begin trading on Jan. 12, 2011.

Equal weight ETFs spread investment holdings equally across index constituents or market segments, regardless of company size, as opposed to market-weighted indexes such as the S&P 500, which multiply stock price by shares outstanding and place greater value on higher market capitalizations.

For example, Rydex’s flagship ETF, the $2 billion Rydex S&P Equal Weight ETF (RSP) launched in 2003, provides the same exposure to small companies in the S&P 500 as it does to large ones. Since inception on April 24, 2003, the ETF has delivered an annualized 8.63% versus 5.15% for the S&P 500 Total Return Index as of Sept. 30, 2010, according to a Rydex news release. 

Rydex’s 16 equal weight ETFs span U.S., emerging and international markets. The addition of the six new ETFs brings Rydex’s total number of exchange traded products to 34, with assets over $6 billion.  The ETF line-up at Rydex, with the exception of CurrencyShares, is known in the marketplace as RydexShares.

“By offering investors and advisors a broad suite of global equity equal weighted ETFs, we are providing an efficient way for investors and advisors to diversify their portfolios while potentially providing enhanced investment results,” said Rich Goldman, CEO of Rydex, in the release.

Rydex’s quantitative strategies CIO, Mike Byrum, said in the release that EW ETFs are a “compelling” alternative to traditional market cap-weighted ETFs. “Not only do equal weight funds employ a disciplined quarterly rebalance, a practice which can result in selling high and buying low, they also offer increased diversification advantages across the constituents within each index,” Byrum said.

Read about Rydex’s liquidation of 12 leveraged and inverse-performing ETFs last spring at AdvisorOne.com.

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