S&P 500 cap-weight vs equal-weight: the 20-year gap?

This page compares 20 years of steady monthly investing into a cap-weighted S&P 500 ETF (SPY) and an equal-weighted ETF (RSP), using the comparison calculator. For the very same 500 companies, it shows how results differ by 'weighting method' and places the megacap-tilt effect and its concentration risk side by side.

Investment conditions

Asset · S&P 500 Cap-Weight ETF (SPY) vs Equal-Weight ETF (RSP)

Method · Comparison

The key is that 'even the same index differs in risk and return by weighting method.' Cap-weighting naturally holds more of the megacaps that drive rallies and can lead in bull markets, but it raises concentration in a handful of names. Equal-weighting is more broadly diversified but can lag in megacap-led markets. In the comparison calculator, review each method's ending balance together with its maximum drawdown and recovery period. The point is to understand that cap-weight's recent lead may reflect a specific megacap-tilt environment rather than being a 'better method.'

Open in comparison calculator

Why this period and asset

SPY and RSP hold the same 500 S&P 500 companies but weight them differently. SPY is 'cap-weighted,' giving larger weights to bigger companies, so in a phase like recently when a few megacap tech names lead the index, those few stocks' swings heavily drive performance. RSP is 'equal-weighted,' giving each company a similar weight, so it tilts less toward megacaps and gives midcaps relatively more influence. Over the past 20 years, in most stretches after the 2008 crisis—and especially in the recent Big Tech years—cap-weight often led equal-weight. But there were earlier periods when equal-weight led, so neither method is always superior.

Caveats & limits

This comparison reflects one specific past period, and which leads can change with the start or end date—especially depending on whether megacaps are driving the market. Past performance does not guarantee the future. In real investing, fees, taxes, and exchange rates (for dollar-denominated assets) affect outcomes. This page recommends no purchase; it is educational material comparing character.

Data sources & limits

Trading fees and taxes are not reflected — figures are pre-tax.
Based on historical data; does not guarantee future returns.

Frequently asked questions

Which is better, cap-weight or equal-weight?

Neither is always better. Cap-weight led when megacaps were strong, while equal-weight led in some other stretches. Use the comparison calculator to view return and drawdown side by side.

Why does cap-weighting carry concentration risk?

The weight of a few very large companies grows naturally. When those megacaps rise, they lift the index sharply; when they fall, drawdowns hinge heavily on those same names. Equal-weighting has relatively less of this tilt.

What should I use as the basis for comparison?

Don't look only at the final return; also review maximum drawdown, time underwater, and recovery period. The point is to see how the weighting method changes risk character even for the same 500 companies.

Related scenarios

📋 Los resultados se basan en datos históricos; las rentabilidades pasadas no garantizan rentabilidades futuras.

📋 Este servicio se ofrece con fines educativos para ayudarte a entender la inversión, no como asesoramiento de inversión.

⚠️ La volatilidad y el nivel de riesgo difieren según el activo, por lo que la rentabilidad por sí sola no determina cuál es mejor.