First of all, the equal weight QQQE ETF wasn't even available to investors before 2012.

I used PortfolioVisualizer.com to compare investing $100K in QQQ versus QQQE starting on April 2012, which is when QQQE first began trading. My backtest shows that QQQ beat equal weight over these past 10 years by a huge margin. The QQQ investor would have $608K today, whereas the QQQE investor would only have $436K.

Here are the figures in detail.

April 2004 to present
Portfolio   Starting Balance Ending balance  CAGR   Sharpe ratio.  Max drawdown
QQQ         $100,000         $607,629        17.40%   0.96          -32.6%
QQQE        $100,000         $435,615        13.97%   0.82          -29.0%  

As you can see, QQQ investors got a 17% annualized return vs only 14% for equal weight QQQE investors. The Sharpe (reward to risk) ratio was better, too.

Secondly, it's easy to do the same backtest comparing SPY vs the equal weight RSP. The first full calendar year that RSP traded was 2004. Between then and today, RSP has returned 9.6% compared to 9.4% for SPY. That's not a significant difference in return, and SPY also has a better Sharpe ratio (0.6) than RSP (0.55). RSP was actually more volatile (std dev = 17%) than SPY (SD = 14.8%).

Not to mention that an equal-weight ETF like RSP is not even an option when you're looking at investment choices for a company 401K plan. Whereas it's easy to find an index fund there.

Berkshire Hathaway FAQ

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