The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and RSP is a Invesco Large Blend fund. So, what’s the difference between BND and RSP? And which fund is better?
The expense ratio of BND is 0.17 percentage points lower than RSP’s (0.03% vs. 0.2%). BND is mostly comprised of AAA bonds while RSP has a high exposure to the technology sector. Overall, BND has provided lower returns than RSP over the past ten years.
In this article, we’ll compare BND vs. RSP. We’ll look at portfolio growth and holdings, as well as at their annual returns and fund composition. Moreover, I’ll also discuss BND’s and RSP’s performance, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||Invesco S&P 500 Equal Weight ETF|
|Category||Intermediate-Term Bond||Large Blend|
The Vanguard Total Bond Market Index Fund ETF Shares (BND) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 312.15B total assets under management and has yielded an average annual return of 4.09% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.03%.
The Invesco S&P 500 Equal Weight ETF (RSP) is a Large Blend fund that is issued by Invesco. It currently has 28.62B total assets under management and has yielded an average annual return of 13.79% over the past 10 years. The fund has a dividend yield of 1.31% with an expense ratio of 0.2%.
BND’s dividend yield is 0.71% higher than that of RSP (2.02% vs. 1.31%). Also, BND yielded on average 9.69% less per year over the past decade (4.09% vs. 13.79%). The expense ratio of BND is 0.17 percentage points lower than RSP’s (0.03% vs. 0.2%).
|BND Bond Sectors||Weight|
BND’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Below B at 68.72%, 16.17%, 11.87%, 3.34%, and 0.01%. The fund is less weighted towards B (0.0%), BB (0.0%), and US Government (0.0%) rated bonds.
|Chipotle Mexican Grill Inc||0.27%|
|Nike Inc Class B||0.25%|
|Monolithic Power Systems Inc||0.25%|
|Enphase Energy Inc||0.25%|
|Advanced Micro Devices Inc||0.25%|
|IDEXX Laboratories Inc||0.24%|
RSP’s Top Holdings are Chipotle Mexican Grill Inc, Nike Inc Class B, MSCI Inc, Monolithic Power Systems Inc, and Enphase Energy Inc at 0.27%, 0.25%, 0.25%, 0.25%, and 0.25%.
Advanced Micro Devices Inc (0.25%), ResMed Inc (0.24%), and PerkinElmer Inc (0.24%) have a slightly smaller but still significant weight. IDEXX Laboratories Inc and Danaher Corp are also represented in the RSP’s holdings at 0.24% and 0.24%.
The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a R-squared of 99.34 with a Treynor Ratio of 2.64 and a Alpha of -0.14. Its Sharpe Ratio is 0.88 while BND’s Standard Deviation is 3.14. Furthermore, the fund has a Mean Return of 0.28 and a Beta of 1.04.
The Invesco S&P 500 Equal Weight ETF (RSP) has a Alpha of -2.45 with a Treynor Ratio of 12.12 and a Sharpe Ratio of 0.89. Its Beta is 1.1 while RSP’s Standard Deviation is 15.36. Furthermore, the fund has a Mean Return of 1.19 and a R-squared of 94.47.
BND’s Mean Return is 0.91 points lower than that of RSP and its R-squared is 4.87 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than RSP. The Alpha and Beta of BND are 2.31 points higher and 0.06 points lower than RSP’s Alpha and Beta.
BND had its best year in 2019 with an annual return of 8.71%. BND’s worst year over the past decade yielded -2.14% and occurred in 2013. In most years the Vanguard Total Bond Market Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2014 where annual returns amounted to 3.62%, 4.04%, and 5.96% respectively.
The year 2013 was the strongest year for RSP, returning 35.6% on an annual basis. The poorest year for RSP in the last ten years was 2018, with a yield of -7.77%. Most years the Invesco S&P 500 Equal Weight ETF has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 14.02%, 14.34%, and 17.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in BND would have resulted in a final balance of $15,456. This is a profit of $5,456 over 11 years and amounts to a compound annual growth rate (CAGR) of 4.09%.
With a $10,000 investment in RSP, the end total would have been $38,664. This equates to a $28,664 profit over 11 years and a compound annual growth rate (CAGR) of 13.79%.
BND’s CAGR is 9.69 percentage points lower than that of RSP and as a result, would have yielded $23,208 less on a $10,000 investment. Thus, BND performed worse than RSP by 9.69% annually.
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