The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between RSP and EMB? And which fund is better?
The expense ratio of RSP is 0.19 percentage points lower than EMB’s (0.2% vs. 0.39%). RSP also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, RSP has provided higher returns than EMB over the past ten years.
In this article, we’ll compare RSP vs. EMB. We’ll look at performance and industry exposure, as well as at their holdings and fund composition. Moreover, I’ll also discuss RSP’s and EMB’s portfolio growth, annual returns, and risk metrics and examine how these affect their overall returns.
|Name||Invesco S&P 500 Equal Weight ETF||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Large Blend||Emerging Markets Bond|
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%.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
RSP’s dividend yield is 2.54% lower than that of EMB (1.31% vs. 3.85%). Also, RSP yielded on average 7.35% more per year over the past decade (13.79% vs. 6.43%). The expense ratio of RSP is 0.19 percentage points lower than EMB’s (0.2% vs. 0.39%).
|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%.
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
The Invesco S&P 500 Equal Weight ETF (RSP) has a Alpha of -2.45 with a Sharpe Ratio of 0.89 and a Standard Deviation of 15.36. Its R-squared is 94.47 while RSP’s Beta is 1.1. Furthermore, the fund has a Mean Return of 1.19 and a Treynor Ratio of 12.12.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Alpha of 0.89 with a Sharpe Ratio of 0.55 and a Standard Deviation of 8.44. Its R-squared is 23.34 while EMB’s Mean Return is 0.44. Furthermore, the fund has a Treynor Ratio of 3.24 and a Beta of 1.36.
RSP’s Mean Return is 0.75 points higher than that of EMB and its R-squared is 71.13 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than EMB. The Alpha and Beta of RSP are 3.34 points lower and 0.26 points lower than EMB’s Alpha and Beta.
RSP had its best year in 2013 with an annual return of 35.6%. RSP’s worst year over the past decade yielded -7.77% and occurred in 2018. In most years the Invesco S&P 500 Equal Weight ETF provided moderate returns such as in 2014, 2016, and 2012 where annual returns amounted to 14.02%, 14.34%, and 17.04% respectively.
The year 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in RSP would have resulted in a final balance of $38,664. This is a profit of $28,664 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.79%.
With a $10,000 investment in EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.
RSP’s CAGR is 7.35 percentage points higher than that of EMB and as a result, would have yielded $19,369 more on a $10,000 investment. Thus, RSP outperformed EMB by 7.35% annually.
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