![]() Sharpe Ratio is a measure of risk-adjusted returns basically, it gives us an idea of the risk an investor has taken on to generate returns. Good news, both RSP and SPY pay dividends thanks to their underlying components.Īt the point of writing, RSP’s 12-month dividend yield is at 1.84% while SPY ‘s is at 1.57%. Of course if you’ve been looking into S&P 500 ETFs, you would have learnt about IVV and VOO, both of which track the S&P 500 at an even lower expense ratio of 0.03%. While 0.2% is still considered cheap, it would definitely eat into RSP’s eventual returns, especially in years when the performance of an equal weighted portfolio is on par with the market capitalization weighted portfolios. ![]() RSP has an expense ratio of 0.2% which is almost twice that of SPY’s which stands at 0.0945%. Since we’re on the topic of fees, let’s move on to: 3) RSP vs SPY – Expense Ratio Here’s a comparison of their CAGR across different time periods:Ĭomparison of RSP and SPY’s CAGR over different time periods Unfortunately, in the shorter term, RSP doesn’t offer that much difference in terms of performance: What if you had paper hands and sold your positions too early? Of course you’d also be wondering if the RSP did better in the short term. Over the long term of 20 years, RSP delivered a better return of 9.47% per year as compared to SPY’s 8.8%.ĭo note that your actual performance would be dependent on when you start investing and if you managed to hold the ETFs through the years. Here’s the performance of RSP vs SPY over the last 20 years (2003 – 2023): ![]() Having an equal weighted portfolio should ideally deliver greater returns since the performance would not be dependent only on the few big companies.īut does the research hold true in the real world? Research has shown that smaller companies tend to outperform in the long run. The SPY tends to track the performance of S&P 500 closely. However, since your portfolio is equally affected by the performance of all 500 stocks, you should be prepared for greater volatility and a higher risk-to-reward profile, due to the nature of the smaller stocks. Those seeking exposure to the overall US stock marketĪs mentioned above, RSP weighs the components in S&P 500 index equally while SPY weighs components by market capitalization. With RSP, you get a more balanced exposure to the top 500 companies listed in the US. Which type of investors should consider this? Historically performs similarly to S&P 500, lower risk Here’re the key differences between RSP and SPY ETFs: RSP vs SPYĪpple (7.48%), Microsoft (6.68%), Amazon (2.9%), Nvidia (2.04%), Alphabet (2.01%)Įli Lilly & Co (0.27%), Intuitive Surgical Inc (0.27%), DaVita Inc (0.26%), Chipotle Mexican Grill (0.26%), Meta Platforms (0.26%) This essentially contains the same companies as the S&P 500, except that every company is weighted equally regardless of their size or market capitalization. The Invesco S&P 500 Equal Weight ETF (RSP) tracks the S&P 500 Equal Weight Index. Introducing: What is the Invesco S&P 500 Equal Weight ETF (RSP) ? Would you be able to capture greater returns if you could invest in the S&P 500 companies equally? That said, historically, smaller companies tend to deliver greater returns. The S&P 500 index is a market capitalization weighted index which means that the larger companies will have a greater weightage than smaller ones in the index. It tracks the S&P 500 index which is composed of the top 500 companies listed in the US markets, by market capitalization.īy investing in the SPY ETF, you gain exposure to a diversified portfolio of the best US companies. ![]() The SPDR S&P 500 ETF (SPY) is one of the biggest ETFs in the world. We explore the differences between RSP and SPY ETFs in greater detail here to help you select the best S&P 500 ETF for your portfolio.īut first, here’s a quick introduction to these S&P500 ETFs: What is SPY? If you’re thinking of investing in the S&P 500 index over the long term, would you do better with RSP’s equal weighted approach given its higher expense ratio? On top of the difference in their approach, these two S&P 500 ETFs have different expense ratios – SPY charges just 0.09% while RSP is more expensive at 0.2%. The differences in their weighting methodologies leads to significant differences in their risk profiles and returns. SPY tracks the performance of the market weighted S&P 500 index while RSP equally weights all of the stocks in the S&P 500 index. ![]()
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