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.
|Name||Invesco S&P 500 Equal Weight ETF||iShares U.S. Treasury Bond ETF|
|Category||Large Blend||Intermediate Government|
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%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|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%.
|GOVT Bond Sectors||Weight|
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.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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.
BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.