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I believe the S&P 500 is overvalued and small-cap stocks are less overvalued. So I would like to buy market index (like 2000 or 5000 companies) but without the S&P 500 companies.

Are there such ETFs?

  • For the US
  • And similar ETFs (small companies excluding large companies) for the whole world or Europe/Asia.

P.S.

Ideally 2000 companies should be weighted equally (same cash value in ETF for each stock), not proportional to its market cap.

And would be nice to being able to trade options on such ETF.

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  • Well, the Russell 2000 is capitalization weighted. A capitalization weighted index is a momentum fund and not really diversified. The smaller companies in the index just wait in the wings for bigger position in the index.
    – S Spring
    Sep 29 '20 at 23:58
  • Questions seeking product/service recommendations are specifically off-topic. Sorry. Sep 30 '20 at 0:07
  • I voted to close, but FWIW, you won't find exactly what you're looking for. I'd check out the list at etf.com/channels/equal-weighted-etfs and invesco.com/us/financial-products/etfs/strategies/… Sep 30 '20 at 0:23
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Ideally 2000 companies should be weighted equally (same cash value in ETF for each stock), not proportional to its market cap.

Equal-weighted ETFs with 2000 companies and no S&P 500 components used to exist in the US. The Guggenheim Russell 2000 Equal Weight ETF (NYSE Arca: EWRS) changed to track another index in 2016, becoming EWSC (see below), so it is gone now. The Invesco Russell 2000 Equal Weight ETF (NYSE Arca: EQWS) fit all your requirements. Unfortunately, such ETFs are not popular, and Invesco liquidated the ETF in 2019.

As far as I can see, there are no US ETFs that fit all your requirements at the moment.

The closest I can find are:

  • Invesco S&P MidCap 400 Equal Weight ETF (NYSE Arca: EWMC)
  • Invesco S&P SmallCap 600 Equal Weight ETF (NYSE Arca: EWSC)

But these have less than 2000 companies, and do not have options.

There aren't that many equal-weighted ETFs in the first place. Within the small number of equal-weighted ETFs, most of them have large-caps in them. So a requirement to exclude S&P 500 companies leaves zero or nearly zero ETFs to choose from. Add your options trading requirement… you will have no ETFs left.

The equal-weighted Russell 2000 ETFs had small AUMs. Their liquidation and transformation over the past few years is a sign that they are not commercially viable.

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The Russell 2000 has little to no overlap with the S&P 500, and has a market-cap-weighted ETF with options (IWM), but (as noted by Flux) no longer has an equal-weighted ETF.

If you relax the requirement of 2000 or more stocks, the S&P MidCap 400 and S&P SmallCap 600 have equal-weighted ETFs (EWMC and EWSC), but they do not appear to have options.

Realistically, since the S&P MidCap 400 and S&P SmallCap 600 each have a relatively narrow range of market caps, similar performance is likely for their market-cap-weighted ETFs (IJH and IJR), which do have options.

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