Why ‘equal weight’ S&P 500 funds are having a moment—and are up almost 16% this year alone

A trader works on the floor of the New York Stock Exchange. (Credit: Getty Images)

If you have part of your portfolio in an S&P 500 index fund, you’re probably patting yourself on the back for the 12%-plus performance you’ve already notched this year. But you could have done even better.

A less flashy corner of the index-fund world treats Nvidia and a random mid-cap industrial stock as equals. It is beating the market by a wide margin. The Invesco S&P 500 Equal Weight ETF (RSP) is up 15.95% year to date through Aug. 26, compared with 12.37% for the iShares Core S&P 500 ETF (IVV)—a nearly 3.58 percentage-point gap that has put equal weighting back in the spotlight.