EQL Barely Budges as Tech Stocks Slide in June
The ALPS Equal Sector Weight ETF (EQL), finished June down just 0.10%, easily outpacing the S&P 500’s 1.0% drop for the month.
Key Takeaways:
- EQL’s underlying index fell just 0.10% in June, versus the S&P 500’s 1.0% drop.
- Healthcare, industrials and financials rallied inside EQL’s equal-weighted sector index.
- Amazon’s 11.9% decline erased most of consumer discretionary’s gains within the fund.
Healthcare, industrials, financials and utilities all advanced in June. This happened even as a slide among a handful of dominant technology names weighed on the broader market, according to a market recap from Janus Henderson Investors.
EQL’s index spreads its holdings evenly across 11 sectors. This gives each one a similar slice of the portfolio regardless of size. The S&P 500, by contrast, lets its largest companies carry outsized weight, which is part of why a slide in a handful of mega-cap tech stocks pulled the broader index down further than EQL’s benchmark.
That gap reflected a broader rotation into cyclical and value-oriented stocks that carried through the month. This remains true even as the biggest technology names cooled off after leading much of the year’s rally.
See more: Not All Diversification Strategies Are Equal
Why EQL’s Sector Split Helped in June
EQL’s index divides the market into 11 broad sectors, covering everything from technology and healthcare to energy and utilities, and gives each one roughly the same 9% slice at every rebalance. Within each sector, stocks are then ranked and weighted by size, the data show.
Healthcare climbed 6.5% and industrials advanced 5.8% within EQL’s index in June, while financials rose 4.2% and utilities gained 2.6%, according to the data.
A few large stocks pulled the other way. Consumer discretionary fell 4.6% for the sector overall, weighed down by Amazon.com, Inc. (AMZN), which dropped 11.9% during the month and pulled the sector’s contribution to negative 0.45%, per the data.
Alphabet Inc. (GOOGL), Google’s parent company, fell nearly 6% in June, pulling the media and communications sector down 7.5%, the numbers show.
Smaller stocks in those same sectors moved the other way. Expedia Group, Inc. (EXPE) gained 13.3% and Airbnb, Inc. (ABNB) climbed 7.3% in June, gains that were mostly hidden within the broader consumer discretionary sector because of Amazon’s larger weighting, the data show.
Healthcare’s strength inside EQL’s index lined up with the broader market, where the sector notched its best month since November, according to Janus Henderson.
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VettaFi LLC (“VettaFi”) is the index provider for EQL, for which it receives an index licensing fee. However, EQL is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of EQL.
