RSP holds every stock in the S&P 500 at approximately equal weight — roughly 0.2% each — rather than weighting by market capitalization. This single structural difference creates dramatically different exposure: the ten largest companies in the cap-weighted S&P 500 represent roughly 35% of that index, while in RSP they carry no more weight than the 500th largest member. The result is meaningful exposure to mid-sized S&P companies that get lost in the cap-weighted index. Equal weighting historically provides a value and small-cap tilt since it systematically overweights cheaper, smaller companies relative to expensive mega-caps. RSP tends to outperform during broad market rallies where participation is wide and underperform during periods of mega-cap dominance — like 2023-2024 — when a handful of giant companies drive index returns. The quarterly rebalancing is a disciplined sell-high, buy-low mechanism. For investors, RSP is a compelling alternative to standard S&P 500 index funds for those who want genuine diversification across 500 companies rather than concentrated exposure to a handful of trillion-dollar companies.
