Rydex Funds is planning a new exchange-traded fund that it believes will exploit an unfilled niche. The Maryland-based fund firm specializes in offering leveraged index funds to advisors. In this case, it is offering a plain vanilla S&P 500 index fund. The difference is that the ETF (the Rydex S&P 500 Equal Weighted Index Fund) will be based on the equal-weighted rather than the value-weighted version of the index.

Such a product may appeal to advisors seeking to avoid exposing their clients to the giant's of the S&P 500 that have taken the hardest hits in the bear market. Equal-weighted indices are skewed to the performance of the stocks in the underlying index with the lowest capitalizations compared to value-weighted indices.

While the product will outperform the standard S&P index in markets in which the stocks with the lowest capitalizations in the index are outperforming, it may disappoint investors in markets in which the big names are hottest.

Still, Rydex will have the only product of its kind, which may give the small rival to the big indexers (Vanguard, Barclays and SSgA) a leg up in this market.  

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