The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and HYG is a iShares High Yield Bond fund. So, what’s the difference between RSP and HYG? And which fund is better?
The expense ratio of RSP is 0.28 percentage points lower than HYG’s (0.2% vs. 0.48%). RSP also has a high exposure to the technology sector while HYG is mostly comprised of BB bonds. Overall, RSP has provided higher returns than HYG over the past ten years.
In this article, we’ll compare RSP vs. HYG. We’ll look at industry exposure and risk metrics, as well as at their holdings and performance. Moreover, I’ll also discuss RSP’s and HYG’s fund composition, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Invesco S&P 500 Equal Weight ETF||iShares iBoxx $ High Yield Corporate Bond ETF|
|Category||Large Blend||High Yield 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 iBoxx $ High Yield Corporate Bond ETF (HYG) is a High Yield Bond fund that is issued by iShares. It currently has 20.03B total assets under management and has yielded an average annual return of 6.42% over the past 10 years. The fund has a dividend yield of 4.44% with an expense ratio of 0.48%.
RSP’s dividend yield is 3.13% lower than that of HYG (1.31% vs. 4.44%). Also, RSP yielded on average 7.37% more per year over the past decade (13.79% vs. 6.42%). The expense ratio of RSP is 0.28 percentage points lower than HYG’s (0.2% vs. 0.48%).
|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%.
|HYG Bond Sectors||Weight|
HYG’s Top Bond Sectors are ratings of BB, B, Below B, BBB, and AAA at 56.53%, 31.27%, 11.4%, 0.61%, and 0.28%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.
The Invesco S&P 500 Equal Weight ETF (RSP) has a Mean Return of 1.19 with a Treynor Ratio of 12.12 and a Standard Deviation of 15.36. Its Sharpe Ratio is 0.89 while RSP’s Beta is 1.1. Furthermore, the fund has a R-squared of 94.47 and a Alpha of -2.45.
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Mean Return of 0.46 with a Beta of 0.48 and a Treynor Ratio of 10.01. Its Sharpe Ratio is 0.7 while HYG’s R-squared is 4.1. Furthermore, the fund has a Alpha of 3.58 and a Standard Deviation of 6.96.
RSP’s Mean Return is 0.73 points higher than that of HYG and its R-squared is 90.37 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than HYG. The Alpha and Beta of RSP are 6.03 points lower and 0.62 points higher than HYG’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 2019 was the strongest year for HYG, returning 14.23% on an annual basis. The poorest year for HYG in the last ten years was 2015, with a yield of -5.55%. Most years the iShares iBoxx $ High Yield Corporate Bond ETF has given investors modest returns, such as in 2011, 2013, and 2017, when gains were 5.89%, 5.9%, and 6.09% 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 HYG, the end total would have been $19,427. This equates to a $9,427 profit over 11 years and a compound annual growth rate (CAGR) of 6.42%.
RSP’s CAGR is 7.37 percentage points higher than that of HYG and as a result, would have yielded $19,237 more on a $10,000 investment. Thus, RSP outperformed HYG by 7.37% 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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.