The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between RSP and GOVT? And which fund is better?
The expense ratio of RSP is 0.15 percentage points higher than GOVT’s (0.2% vs. 0.05%). RSP also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, RSP has provided higher returns than GOVT over the past ten years.
In this article, we’ll compare RSP vs. GOVT. We’ll look at portfolio growth and performance, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss RSP’s and GOVT’s risk metrics, holdings, and annual returns and examine how these affect their overall returns.
Summary
| RSP | GOVT | |
| Name | Invesco S&P 500 Equal Weight ETF | iShares U.S. Treasury Bond ETF |
| Category | Large Blend | Intermediate Government |
| Issuer | Invesco | iShares |
| AUM | 28.62B | 17.07B |
| Avg. Return | 13.79% | 2.67% |
| Div. Yield | 1.31% | 1.0% |
| Expense Ratio | 0.2% | 0.05% |
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 U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
RSP’s dividend yield is 0.31% higher than that of GOVT (1.31% vs. 1.0%). Also, RSP yielded on average 11.11% more per year over the past decade (13.79% vs. 2.67%). The expense ratio of RSP is 0.15 percentage points higher than GOVT’s (0.2% vs. 0.05%).
Fund Composition
Holdings
| RSP Holdings | Weight |
| Chipotle Mexican Grill Inc | 0.27% |
| Nike Inc Class B | 0.25% |
| MSCI Inc | 0.25% |
| Monolithic Power Systems Inc | 0.25% |
| Enphase Energy Inc | 0.25% |
| Advanced Micro Devices Inc | 0.25% |
| ResMed Inc | 0.24% |
| PerkinElmer Inc | 0.24% |
| IDEXX Laboratories Inc | 0.24% |
| Danaher Corp | 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%.
| GOVT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| RSP | GOVT | |
| Mean Return | 1.19 | 0 |
| R-squared | 94.47 | 0 |
| Std. Deviation | 15.36 | 0 |
| Alpha | -2.45 | 0 |
| Beta | 1.1 | 0 |
| Sharpe Ratio | 0.89 | 0 |
| Treynor Ratio | 12.12 | 0 |
The Invesco S&P 500 Equal Weight ETF (RSP) has a Alpha of -2.45 with a Standard Deviation of 15.36 and a Beta of 1.1. Its R-squared is 94.47 while RSP’s Mean Return is 1.19. Furthermore, the fund has a Treynor Ratio of 12.12 and a Sharpe Ratio of 0.89.
The iShares U.S. Treasury Bond ETF (GOVT) has a Standard Deviation of 0 with a Treynor Ratio of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while GOVT’s Beta is 0. Furthermore, the fund has a R-squared of 0 and a Alpha of 0.
RSP’s Mean Return is 1.19 points higher than that of GOVT and its R-squared is 94.47 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than GOVT. The Alpha and Beta of RSP are 2.45 points lower and 1.10 points higher than GOVT’s Alpha and Beta.
Performance
Annual Returns
| Year | RSP | GOVT |
| 2020 | 12.75% | 7.92% |
| 2019 | 28.94% | 6.71% |
| 2018 | -7.77% | 0.74% |
| 2017 | 18.52% | 2.19% |
| 2016 | 14.34% | 0.92% |
| 2015 | -2.57% | 0.76% |
| 2014 | 14.02% | 4.99% |
| 2013 | 35.6% | -2.84% |
| 2012 | 17.04% | 0.0% |
| 2011 | -0.5% | 0.0% |
| 2010 | 21.3% | 0.0% |
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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| RSP | $10,000 | $27,371 | 13.79% |
| GOVT | $10,000 | $12,297 | 2.67% |
A $10,000 investment in RSP would have resulted in a final balance of $27,371. This is a profit of $17,371 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.79%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
RSP’s CAGR is 11.11 percentage points higher than that of GOVT and as a result, would have yielded $15,074 more on a $10,000 investment. Thus, RSP outperformed GOVT by 11.11% annually.
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