Equal weight and market cap weight are two ways to build a fund that holds the S&P 500, the index of 500 large US companies. We compared one fund of each over 20 years, with dividends counted.
RSP (the equal weight S&P 500 ETF) turned $10,000 into $71,793. SPY (the market cap weighted S&P 500 ETF) turned it into $88,249. An ETF, or exchange-traded fund, trades on a stock exchange like a share.
What is the difference between the two? A market cap weighted fund holds each company in proportion to its market value. An equal weight fund gives every company the same share.
$10,000 in the market cap fund SPY became $88,249 from 2006 to 2026, against $71,793 in the equal weight fund RSP.
Equal weight led at the end of each year from 2009 to 2019. By 26 October 2026 RSP's value was 81.4% of SPY's.
SPY finished ahead whichever year from 2006 to 2025 we started the test.
What is the difference between equal weight and market cap weight?
A company's market capitalisation, or market cap, is its share price multiplied by its number of shares in issue.
A market cap weighted fund sets each company's share of the fund by that company's market cap. A company worth twice as much gets twice the share. The S&P 500 Index, which SPY tracks, works this way. Our explainer on why the S&P 500 is hard to beat covers the index itself.
An equal weight fund gives every company the same share. In a fund with 500 holdings, that is 0.20% each.
A checked example uses four invented companies. A is worth $2 trillion, B $1 trillion, C $500 billion and D $500 billion, so the total is $4 trillion. The market cap fund holds 50%, 25%, 12.5% and 12.5%. The equal weight fund holds 25% of each.
Suppose that in one month A falls 10% and D rises 20%, while B and C do not move.
The market cap fund returns 0.50 × −10% + 0.125 × 20%, which is −2.5%. The equal weight fund returns 0.25 × (−10% + 0% + 0% + 20%), which is +2.5%. The companies and the month are the same. Only the weights differ.
After that month the equal weight fund has drifted to 21.95% in A, 24.39% in B, 24.39% in C and 29.27% in D. It sells some of D and buys the others to return to 25% each.
RSP does this every quarter, according to its issuer's page, which we read on 27 October 2026. The market cap fund needs no such trades.
How did we compare the two funds?
RSP tracks the S&P 500 Equal Weight Index, which holds the same companies as the S&P 500 with equal weights. Below, "equal weight" means RSP and "market cap" means SPY.
The window runs from 3 January 2006 to 26 October 2026. That is 5,236 trading days over 20.8 years. RSP's price history starts on 30 April 2003, so 2006 is our choice of start. Other starts come further down.
Every return counts dividends. We put $10,000 into each fund on 3 January 2006 and left it there. We leave out the buyer's trading costs and tax.
The compound annual rate is the single yearly return that turns the starting sum into the ending sum. We call it the annual rate.
A calendar year runs from 1 January to 31 December. A fall from a high is the drop from a fund's highest close to its lowest close before it regains that high.
The expense ratios on the issuers' pages on 27 October 2026 were 0.20% a year for RSP and 0.0945% for SPY. Those are today's ratios, not those charged across the whole window.
Which fund grew $10,000 more?
SPY turned $10,000 into $88,249, an annual rate of 11.03%. RSP turned it into $71,793, an annual rate of 9.94%. SPY finished $16,456 ahead, which is 1.09 points a year.
Source: YX Insights price data
Chart 1 shows the market cap fund $16,456 ahead of the equal weight fund. Both finished far above the grey $10,000 stake.
When did equal weight lead?
Chart 2 divides RSP's value by SPY's value on each day and multiplies by 100. We call this the ratio. A ratio above 100 means the equal weight fund is ahead.
Source: YX Insights price data
The ratio peaked at 112.3 on 6 April 2015. It was lowest at 77.6 on 7 October 2026. We searched the whole window, 3 January 2006 to 26 October 2026, for both. The last ratio was 81.4.
By 6 April 2015 RSP had gained 122.5% against 98.1% for SPY. From then to 26 October 2026, which is 11.6 years, RSP gained 222.7% against 345.4%.
The ratio closed above 100 at the end of every year from 2009 to 2019. It closed above 100 again at the end of 2022. At the end of 2023, 2024 and 2025 it stood at 94.0, 84.9 and 80.2.
Which years did each fund win?
Chart 3 gives the gap in return for each of the 21 calendar years, equal weight minus market cap. A bar to the right means equal weight was ahead. 2006 and 2026 are part years.
Source: YX Insights price data
Equal weight was ahead in 9 of the 21 years. Market cap was ahead in 12. Equal weight's biggest lead in Chart 3 is 2009. Market cap's two biggest leads are 2023 and 2024.
In 2009 RSP rose 44.64% against 26.37% for SPY, a lead of 18.3 points. In 2023 RSP rose 13.70% against 26.19%, a lead of 12.5 points for SPY. Over the 2022 calendar year RSP fell 11.62% while SPY fell 18.17%.
The two funds hold the same companies, so most of the gap in any year comes from the weights.
How did each fund handle the big falls?
We searched the whole window for every fall from a high of 20% or more in SPY. Each runs from SPY's high to its lowest close before SPY regained that high. There are three. Chart 4 measures RSP over the same dates.
Source: YX Insights price data
RSP fell further in two of the three.
From 9 October 2007 to 9 March 2009 it fell 59.2% against 55.2% for SPY. From 19 February to 23 March 2020 it fell 39.0% against 33.7%. From the 3 January 2022 high to the 12 October 2022 low it fell 20.3% against 24.5%. That differs from the calendar-year figures above.
RSP recovered faster after the 2009 low. From 9 March 2009, it took 1.92 years to regain its own old high. SPY took 3.44 years.
RSP also swung more day to day. Volatility measures how much a fund's daily returns swing around their average. We scale the daily figure to a year. RSP's was 20.44% and SPY's was 19.17%. Both use the same 5,235 trading days.
Does the answer depend on the start date?
We repeated the test from the first trading day of each year from 2006 to 2025, ending on 26 October 2026 each time. SPY finished ahead from all 20 start dates. The closest was the 2025 start, with RSP up 28.0% and SPY up 33.5%.
From RSP's first price on 30 April 2003, the 23.5 years to 26 October 2026 gave RSP 11.23% a year against 11.45% for SPY. $10,000 became $121,922 in RSP and $127,719 in SPY.
We also ran windows that start on every trading day. RSP finished ahead in 912 of 2,724 ten-year windows, which is 33.5%. The windows overlap, so they are not independent tests.
In this window RSP returned 9.94% a year and SPY 11.03%. The test covers one pair of funds and makes no forecast.
Get the next explainer
The Academy is free to read, here on the web. The Long Trend, our free weekly letter, comes by email.
Learn more with YX Insights
This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.
The same approach runs through everything else we publish:
Systematic Portfolio: ready-made portfolios for Macro & Megacaps and for Commodities. We publish the holdings and every change.
Multi-model Signals: a daily long-or-flat call on every name we cover. Each call shows how strongly our four models agree.
Research: company deep dives, macro commentary and essays on how we test.
Good places to start on the website:
Academy: more explainers like this one.
Start here: get our free weekly letter by email.
Macro & Megacaps Systematic Portfolio and Commodities: the two portfolios in detail.
Track record: live results since 3 August 2026, plus the ten-year backtest.
Upgrade: get the Systematic Portfolio, Multi-model Signals and research in full.
Common questions about equal weight vs market cap
What is an equal weight ETF?
An equal weight ETF holds every company in an index at the same share. Equal weighting gives each company the same share, which is 0.20% in a fund with 500 holdings. In our test, RSP is the equal weight fund. SPY is the market cap fund.
Is equal weight better than market cap weight?
Not in our test. From 3 January 2006 to 26 October 2026, $10,000 in the equal weight fund RSP became $71,793, against $88,249 in the market cap fund SPY. Equal weight led in 9 of the 21 calendar years. The result depends on the period. The test makes no forecast.
Is an equal weight fund riskier than a market cap fund?
RSP moved more in our test. Its volatility was 20.44% against 19.17% for SPY. RSP fell further than SPY in the 2007 to 2009 and 2020 market falls. It fell less in 2022, by 20.3% against 24.5% from the January high to the October low. The test covers one pair of funds over one window.
How often does an equal weight S&P 500 fund rebalance?
RSP rebalances quarterly, according to its issuer's page read on 27 October 2026. A rebalance resets every company to the same weight, 0.20% in a fund with 500 holdings. The fund sells holdings that have risen against the rest and buys those that have fallen.
What do RSP and SPY charge?
On 27 October 2026 the issuers' pages gave an expense ratio of 0.20% a year for RSP and 0.0945% for SPY. The gap is 0.1055 points a year. Those are today's ratios, not those charged across our 2006 to 2026 window.
DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
