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IWM vs. RSP: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and RSP is a Invesco Large Blend fund. So, what’s the difference between IWM and RSP? And which fund is better?

The expense ratio of IWM is 0.01 percentage points lower than RSP’s (0.19% vs. 0.2%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided lower returns than RSP over the past ten years.

In this article, we’ll compare IWM vs. RSP. We’ll look at industry exposure and portfolio growth, as well as at their fund composition and holdings. Moreover, I’ll also discuss IWM’s and RSP’s performance, annual returns, and risk metrics and examine how these affect their overall returns.

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

IWMRSP
NameiShares Russell 2000 ETFInvesco S&P 500 Equal Weight ETF
CategorySmall BlendLarge Blend
IssueriSharesInvesco
AUM66.48B28.62B
Avg. Return13.52%13.79%
Div. Yield0.86%1.31%
Expense Ratio0.19%0.2%

The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% with an expense ratio of 0.19%.

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%.

IWM’s dividend yield is 0.45% lower than that of RSP (0.86% vs. 1.31%). Also, IWM yielded on average 0.27% less per year over the past decade (13.52% vs. 13.79%). The expense ratio of IWM is 0.01 percentage points lower than RSP’s (0.19% vs. 0.2%).

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Fund Composition

Industry Exposure

IWM vs. RSP - Industry Exposure

IWMRSP
Technology14.21%14.73%
Industrials14.78%14.62%
Energy3.74%3.9%
Communication Services3.79%4.31%
Utilities2.44%5.58%
Healthcare20.3%13.69%
Consumer Defensive3.65%6.86%
Real Estate8.59%5.84%
Financial Services13.76%13.43%
Consumer Cyclical10.99%13.01%
Basic Materials3.74%4.04%

The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.

IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.

The Invesco S&P 500 Equal Weight ETF (RSP) has the most exposure to the Technology sector at 14.73%. This is followed by Industrials and Healthcare at 14.62% and 13.69% respectively. Basic Materials (4.04%), Communication Services (4.31%), and Utilities (5.58%) only make up 13.93% of the fund’s total assets.

RSP’s mid-section with moderate exposure is comprised of Real Estate, Consumer Defensive, Consumer Cyclical, Financial Services, and Healthcare stocks at 5.84%, 6.86%, 13.01%, 13.43%, and 13.69%.

IWM is 6.61% more exposed to the Healthcare sector than RSP (20.3% vs 13.69%). IWM’s exposure to Industrials and Technology stocks is 0.16% higher and 0.52% lower respectively (14.78% vs. 14.62% and 14.21% vs. 14.73%). In total, Consumer Defensive, Basic Materials, and Energy also make up 3.67% less of the fund’s holdings compared to RSP (11.13% vs. 14.80%).

Holdings

IWM - Holdings

IWM HoldingsWeight
AMC Entertainment Holdings Inc Class A0.52%
Intellia Therapeutics Inc0.33%
Crocs Inc0.3%
BlackRock Cash Funds Treasury SL Agency0.29%
Tenet Healthcare Corp0.26%
Lattice Semiconductor Corp0.26%
Tetra Tech Inc0.25%
II-VI Inc0.25%
EastGroup Properties Inc0.24%
Arrowhead Pharmaceuticals Inc0.24%

IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.

Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.

RSP - Holdings

RSP HoldingsWeight
Chipotle Mexican Grill Inc0.27%
Nike Inc Class B0.25%
MSCI Inc0.25%
Monolithic Power Systems Inc0.25%
Enphase Energy Inc0.25%
Advanced Micro Devices Inc0.25%
ResMed Inc0.24%
PerkinElmer Inc0.24%
IDEXX Laboratories Inc0.24%
Danaher Corp0.24%

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%.

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Risk Analysis

IWMRSP
Mean Return1.121.19
R-squared77.7394.47
Std. Deviation18.8715.36
Alpha-5.12-2.45
Beta1.231.1
Sharpe Ratio0.680.89
Treynor Ratio9.5612.12

The iShares Russell 2000 ETF (IWM) has a Treynor Ratio of 9.56 with a Standard Deviation of 18.87 and a Alpha of -5.12. Its Mean Return is 1.12 while IWM’s Beta is 1.23. Furthermore, the fund has a R-squared of 77.73 and a Sharpe Ratio of 0.68.

The Invesco S&P 500 Equal Weight ETF (RSP) has a Beta of 1.1 with a Mean Return of 1.19 and a Sharpe Ratio of 0.89. Its Alpha is -2.45 while RSP’s Treynor Ratio is 12.12. Furthermore, the fund has a R-squared of 94.47 and a Standard Deviation of 15.36.

IWM’s Mean Return is 0.07 points lower than that of RSP and its R-squared is 16.74 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than RSP. The Alpha and Beta of IWM are 2.67 points lower and 0.13 points higher than RSP’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. RSP - Annual Returns

YearIWMRSP
202019.89%12.75%
201925.42%28.94%
2018-11.02%-7.77%
201714.66%18.52%
201621.36%14.34%
2015-4.33%-2.57%
20144.94%14.02%
201338.85%35.6%
201216.39%17.04%
2011-4.19%-0.5%
201026.76%21.3%

IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% 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.

Portfolio Growth

IWM vs. RSP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$36,68613.52%
RSP$10,000$38,66413.79%

A $10,000 investment in IWM would have resulted in a final balance of $36,686. This is a profit of $26,686 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.52%.

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%.

IWM’s CAGR is 0.27 percentage points lower than that of RSP and as a result, would have yielded $1,978 less on a $10,000 investment. Thus, IWM performed worse than RSP by 0.27% annually.


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