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Rydex launches two new S&P equal weight ETFs


Rydex, a leading provider of echange traded funds (ETFs) and alternative investments, has launched two new equal weight (EW) ETFs, Rydex S&P SmallCap 600 Equal Weight ETF and Rydex S&P MidCap 400 Equal Weight ETF.

The addition of the two new funds brings Rydex’s total number of EW ETFs to 18 and total number of exchange traded products to 36, with assets over USD9 billion. The ETF line-up at Rydex, with the exception of CurrencyShares®, is known in the marketplace as RydexShares. Rydex is the leader in equal weight ETFs — offering the widest choice of equal weight products and the most equal weight ETFs in the industry.

Rydex S&P Midcap 400 Equal Weight ETF (EWMD) and Rydex S&P SmallCap 600 Equal Weight ETF (EWSM) offer broad exposure to the companies in the S&P MidCap 400 Equal Weight Index (EWI) and the S&P SmallCap 600 (EWI), respectively. Both EW ETFs invest in the same stocks as their cap weight versions, have equal exposure to each stock and are rebalanced quarterly.

"Rydex has been a pioneer in the ETF space since the 2003 launch of our flagship ETF Rydex S&P 500 Equal Weight ETF (RSP)," says Jim King (pictured), ETF portfolio manager at Rydex|SGI. "The new ETFs provide investors access to two additional ways to employ an equal weight approach in portfolio construction, allowing them to increase performance potential and diversify holdings."

"Rydex was an early innovator in the equal weight ETF market," says Craig Lazarra, senior director for US Equities at S&P Indices. "S&P is pleased to see Rydex’s equal weight product line growing, and excited to partner with them on this natural extension of their business."

Equal weight indices are typically comprised of the same constituents as their cap-weighted equivalents but each component is equally weighted — which provides the following potential benefits:

Performance Potential. An equal weight approach reduces the bias towards the largest companies within a particular cap-weighted strategy. The smaller companies may help an equal weight strategy outperform when large caps are not in favour, though when large stocks are in favour, equal weight strategies may underperform.

Diversification. While diversification does not assure a profit nor eliminate the risk of experiencing investment losses, it may help reduce concentration risk and provide more balanced exposure across market capitalizations, sectors and other broad risk factors.

Disciplined rebalancing. As portfolios are regularly rebalanced back to equal-weight, they take profits on outperforming components of the index-such as specific companies or sectors. This rebalancing may help balance risk factors and provide enhanced risk control.

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