At Extreme Investor Network, we are always on the lookout for investment strategies that can help our members maximize their returns in the stock market. That’s why we were excited to come across a recent recommendation from Bank of America’s Savita Subramanian, head of U.S. equity and quantitative strategy.
Subramanian suggests investing in the equal-weighted S&P 500 index rather than the capitalization-weighted S&P 500 index. She believes that valuations are more compelling in the equal-weighted index, which is currently trading at a significant discount compared to the traditional S&P 500.
In fact, Subramanian points out that the equal-weighted S&P 500 index is approaching a record discount and could offer investors a unique opportunity to capture a broadening out in stock performance. With mega-cap stocks leading the market lower in recent weeks, Subramanian believes that focusing on earnings rather than price-to-earnings multiples will be the primary driver of returns going forward.
But the benefits of investing in the equal-weighted S&P 500 don’t stop there. Subramanian notes that the index is inherently less risky than the traditional S&P 500, as large-cap stocks are easier to trade in and out of than small-cap stocks. Additionally, she points out that the equal-weighted index is currently trading at an 8% premium compared to the small-cap Russell 2000 index.
For investors looking to take advantage of this recommendation, one possible option is the Invesco S&P 500 Equal Weight ETF (RSP). This ETF tracks the performance of the equal-weighted S&P 500 index and could be a strategic way to capitalize on the potential upside identified by Subramanian.
At Extreme Investor Network, we believe in providing our members with unique and actionable investment insights. By staying ahead of trends and recommendations like the one from Bank of America, we aim to help our members make informed decisions that can lead to long-term financial success. Stay tuned for more exclusive content and investment opportunities on our website.