When geopolitical tensions rise or defense budgets expand, investors often chase the sector through broad market funds. But SPDR S&P Aerospace & Defense ETF (NYSEARCA:XAR) doesn't work like most sector plays. It spreads capital equally across 41 holdings, giving smaller aerospace suppliers and emerging space companies the same weight as industry giants like Boeing ( NYSE:BA) and Lockheed Martin ( NYSE:LMT). That structural choice creates a fundamentally different risk profile than market-cap weighted alternatives.
The Direxion NASDAQ-100 Equal Weighted Index Shares ( NASDAQ:QQQE) doesn't generate income the way traditional dividend ETFs do. With just $1.2 billion in assets and a 0.35% expense ratio, this fund tracks the NASDAQ-100 using equal weighting rather than market cap weighting. That structural difference means each of the 100 holdings gets roughly 1% of the portfolio instead of letting mega-caps dominate. The result is a growth-focused ETF where dividends are secondary.
The S&P 500 has a concentration problem. At the start of 2026, the top seven stocks account for roughly a third of the market-cap weighted index, leaving investors heavily exposed to a handful of mega-cap technology companies. Invesco S&P 100 Equal Weight ETF ( NYSEARCA:EQWL) offers a different approach: it takes the 100 largest companies in the S&P 500 and gives each equal weight, capping even giants like Apple Inc. ( NASDAQ:AAPL) and Microsoft Corporation ( NASDAQ:MSFT) at roughly 1% of the portfolio.