He just nailed another gold prediction … (From Weiss Ratings)
Key Takeaways
- The market rotation that began in fall 2025 and continued into 2026 has benefited less popular sectors as well as equal weighted funds.
- Tech stocks have staged a comeback over the past week in the lead-up to the Magnificent Seven’s earnings.
- Still, the Invesco S&P 500 Equal Weight ETF is outperforming weighted index funds like the Vanguard S&P 500 ETF by 100 basis points.
The market rotation out of stocks heavily leveraged to AI—such as the Magnificent Seven—and into defensive corners of the market has continued into the new year. In turn, those inflows have helped sectors such as energy, materials, and consumer staples lead the way over the past month.
During that period, those three groups have generated gains of more than 12%, 8%, and 6%, respectively, ranking them atop the S&P 500.
In doing so, they have also helped equal-weighted exchange-traded funds (ETFs) outperform their market cap-weighted counterparts as the tech and communication services sectors—which are home to the Mag 7—have floundered their way to an uninspiring gain of 1.04% and a loss of 0.91%, respectively.
But with Q4 2025 earnings season underway and Big Tech starting to report this week, the mega-cap companies could be poised to rebound. That begs the question: How much longer can equal-weighted ETFs continue to outperform the S&P 500?
Gold has weathered every financial disaster in history, and it's up more than 100 percent in the last two years. But there's another reason to pay attention now. Since 1950, roughly 70 percent of all the gold on earth has already been mined. What remains is harder to find and more costly to extract. Supplies are running out at the exact moment the world needs gold to stabilize heavily indebted financial systems. A four-stock portfolio of top gold developers is now available, selling at an average 82 percent discount to asset value.
Get the four picks plus a bonus stock with potential for significant upside.
Historically High Valuations and Concentration Risk Have Spooked Investors
One issue that arises from that lack of diversification is concentration risk. Investors’ portfolios are overexposed to certain markets, sectors, and industries. Take, for example, the VOO’s allocations:
- 96.5% of the stocks are based in the United States.
- 32.6% of the stocks fall into the tech sector.
- 14.1% of the stocks belong to the semiconductor and semiconductor equipment industry.
As a result, institutional buying for the VOO has slowed dramatically from $72 billion in Q4 2024 to just $7.51 billion in Q4 2025—a year-over-year (YOY) decrease of nearly 90%. At the same time, institutional selling slowed from $7.24 billion to $588 million—or a nearly 92% YOY decrease.
The Magnificent Seven’s underperformance over the past year has been well-documented. Until those hyperscalers and chipmakers can prove that their record-high CapEx spending can—and will—translate into increased earnings, both institutional and retail investors are likely to continue piling into ETFs offering more appealing weightings.
The Invesco S&P 500 Equal Weight ETF’s Healthy Balance
To be fair, institutional buying of the RSP has notably slowed as well. From Q4 2024 to Q4 2025, inflows fell by nearly 92%. But unlike the VOO, institutional selling of Invesco’s equal weight fund only decreased 70%.
But while the mega-cap companies that dominate weighted index funds continue to introduce historically high concentration risk to investors’ portfolios, the RSP’s holdings are equally allocated, and its positions across sectors and industries are more evenly distributed.
Whereas the VOO’s top sector is tech at nearly 33%, that sector ranks third in the RSP behind financials (15.1%) and industrials (14.2%), the latter of which was the third-best performing sector in the S&P 500 last year, having continued that run with a 4.99% gain over the past month.
Semiconductors—the VOO’s top industry at 14.1%—ranks ninth in the RSP at just 3.9%.
At 6.1%, utilities are the RSP’s top industry, followed closely by capital markets (5%), health care equipment and supplies (5.0%), and real estate management and development (5%).
That weighting would limit potential upside if the Mag 7 were to rebound this year. However, the RSP’s allocations also insulate investors from the heightened volatility and downside risks that come with overly concentrated funds.
Read this article online ›
Stay Ahead of the Market
The best investment opportunities don't wait. Get our research and stock ideas delivered straight to your smartphone—so you never miss a market-moving opportunity. Our text alerts ensure you see timely stock ideas and professional research reports instantly, whether you're in a meeting, commuting, or away from your desk.
Get Text Alerts from American Market News (free)
0 التعليقات:
إرسال تعليق