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Equal Sector ETF celebrates first anniversary


The Alps Equal Sector Weight ETF has outperformed the S&P 500 Index in its first year of operations.

The fund, which was launched on 7 July 2009, generated a total return of 17.06 per cent versus 16.74 per cent for the S&P 500 for the year ended 7 July 2010.

While the concept of equal-weight indexing is not altogether new, Equal Sector investing takes a slightly different approach.

“Most equal-weight indexes are based at the stock level,” says Alps director of investment research and strategy Jeremy Held. “EQL is an important extension of the equal-weight concept in that it specifically addresses sector risk, which we consider to be a much more important and fundamental risk to client portfolios than individual stocks.

“Over the last 30 years the largest annual declines in the S&P 500 have been precipitated by a crash in the market’s largest sector. In 1981 it was energy. In 2000 it was technology stocks. Most recently in 2008 it was the financial sector. An Equal Sector strategy can minimise the negative impact of any one sector. At the same time by offering meaningful exposure to each sector of the market, it allows investors the ability to participate in market rallies regardless of where they occur.”

The fund raised just over USD40min the last year.

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