The S&P 500 (^GSPC) is delivering strong results in 2026, but the stocks driving those gains have shifted in a meaningful way.
Megacap technology companies, which dominated market returns during the artificial intelligence boom, are no longer leading the charge higher this year.
Year to date, the traditional S&P 500 index is up nearly 13% on a total return basis, while the equal-weight version of the index has gained more than 14%.
That outperformance signals a broader market rally in which more segments are participating, something many investors have been waiting years to see.
The Vanguard S&P 500 ETF (VOO) currently has around 37% of assets invested in the tech sector, the highest percentage since at least 1990 and above the roughly 33% peak seen during the dot-com bubble.
Companies like Nvidia, Alphabet, and Microsoft surged in recent years thanks to AI enthusiasm, giving them outsized influence over the market-cap-weighted index.
With the market showing signs of rotation away from those megacap names, some analysts argue it may be time to consider reducing high-tech concentration in a portfolio.
The S&P 500 Equal Weight index owns the same 500 companies but resets each stock’s allocation to approximately 0.2% at each quarterly rebalancing, eliminating the dominance of any single name.
Since the beginning of 1990, the equal-weight index has outperformed the traditional S&P 500 by a cumulative 4,940% to 4,410%, a margin that holds even after accounting for recent AI-driven gains in the cap-weighted version.
The Invesco S&P 500 Equal Weight ETF (RSP) tracks that equal-weight index and charges an expense ratio of 0.20%, making it an accessible tool for investors looking to rebalance their exposure.
In RSP, the tech sector still accounts for 15% of the portfolio, but it is just one of five sectors that each receive an allocation of at least 9%, providing meaningful diversification across the broader economy.
Investors who hold VOO as a core portfolio position may not need to make a dramatic switch, but directing new contributions toward RSP could be a measured way to benefit from continued market broadening.
If the rotation away from megacap tech persists, equal-weight exposure gives investors a way to capture gains across a wider range of companies rather than betting heavily on a handful of names.
The underlying thesis is straightforward: when market leadership broadens, funds that spread weight evenly across all 500 stocks tend to reward investors more consistently than those concentrated at the top.
