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Alps launches equal sector weight ETF

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Alps has launched an equal sector exchange-traded fund which seeks to track the performance of the Banc of America Securities – Merrill Lynch Equal Sector Weight Index.

Alps has launched an equal sector exchange-traded fund which seeks to track the performance of the Banc of America Securities – Merrill Lynch Equal Sector Weight Index.

It will own each of the nine Select Sector SPDR ETFs in equal weights. The nine Select Sector SPDR ETFs will be rebalanced back to equal weight on a quarterly basis.

‘Most equal-weight indexes are based at the stock level,’ says Alps director of product research, Jeremy Held. ‘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.’

While EQL will be the first equal sector ETF, the concept of equal sector investing is not a completely new one. 

‘The Sector SPDR ETFs have been used by both financial advisors and institutional investors to create their own equal sector strategy for years,’ says Held. ‘By offering this strategy in a packaged ETF solution we feel that the advantages of equal sector investing will now be available to a wider range of investors.’

EQL will be the second ETF sponsored by Alps. It is also the sponsor of the Cohen & Steers Global Real Estate ETF which was launched in May 2008.

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