It tracks the S&P 500 Equal Weight Industrials Index and holds every industrial company in the index at the same weight. Through quarterly rebalancing, it resets each holding's weight to equal and keeps the strategy intact.

It suits diversification-minded investors who want to avoid industrial portfolios skewed toward a few giant companies and prefer to participate equally in the growth of every company in the sector.

It is a passive (index-tracking) ETF launched by Invesco in 2006.

By assigning the same weight to every company in the sector regardless of market capitalization, the fund prevents large caps from dictating the performance of the entire index. As a result, the performance of relatively smaller mid-cap companies has a greater impact on the overall portfolio.

• Reduced large-cap concentration risk
• Higher exposure to quality mid-cap stocks within the sector

Assets under management (AUM) stand at $718.8M, and the expense ratio is 0.40% per year.

Just as RSPF in the table applies an equal-weight approach to the financial sector, RSPN executes the same strategy in the industrials sector. Compared with the market-cap-weighted XLI, it offers a better balance among holdings.

The fund has shown a steady trend amid tailwinds across the industrials sector, such as expanding infrastructure investment and supply chain restructuring. Because weak earnings at a single giant company have little effect on the overall index, it can also display a relatively defensive profile.

As preference for equal weighting grows as part of smart beta strategies, steady inflows have been observed. The money coming in is mainly from investors who expect better performance than large-cap-focused products during sector rotation.

Equal weighting across all holdings lets investors enjoy broad growth within the sector, but it comes with rebalancing costs and exposure to mid-cap volatility.

Besides RSPF shown in the table, representative industrials products include XLI and VIS, which use a market-cap-weighted approach. If you want to invest in industrials at a lower cost, FIDU can be an alternative, and FXR, which uses a specific algorithm, and PRN, a momentum strategy fund, are also useful comparison candidates.

RSPN offers a refined diversification tool for investors who do not want to miss any opportunity within the industrials sector. Please review the following points before investing.

Industrials is a sector that reacts very sensitively to the economic cycle. Equal weighting reduces the risk of individual companies, but the fund carries risk similar to the market when macroeconomic indicators that affect the entire sector change.

It is a product suited to investors who want to move away from the dominance of specific companies and expect solid growth across the industrials sector. From a long-term perspective, it has sufficient competitiveness to capture the even performance of a variety of quality stocks within the sector.