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.
Summary
| RSP | HYG | |
| Name | Invesco S&P 500 Equal Weight ETF | iShares iBoxx $ High Yield Corporate Bond ETF |
| Category | Large Blend | High Yield Bond |
| Issuer | Invesco | iShares |
| AUM | 28.62B | 20.03B |
| Avg. Return | 13.79% | 6.42% |
| Div. Yield | 1.31% | 4.44% |
| Expense Ratio | 0.2% | 0.48% |
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%).
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%.
| HYG Bond Sectors | Weight |
| BB | 56.53% |
| B | 31.27% |
| Below B | 11.4% |
| BBB | 0.61% |
| AAA | 0.28% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
| Others | -0.09% |
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.
Risk Analysis
| RSP | HYG | |
| Mean Return | 1.19 | 0.46 |
| R-squared | 94.47 | 4.1 |
| Std. Deviation | 15.36 | 6.96 |
| Alpha | -2.45 | 3.58 |
| Beta | 1.1 | 0.48 |
| Sharpe Ratio | 0.89 | 0.7 |
| Treynor Ratio | 12.12 | 10.01 |
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.
Performance
Annual Returns
| Year | RSP | HYG |
| 2020 | 12.75% | 4.12% |
| 2019 | 28.94% | 14.23% |
| 2018 | -7.77% | -1.93% |
| 2017 | 18.52% | 6.09% |
| 2016 | 14.34% | 13.92% |
| 2015 | -2.57% | -5.55% |
| 2014 | 14.02% | 2.0% |
| 2013 | 35.6% | 5.9% |
| 2012 | 17.04% | 13.83% |
| 2011 | -0.5% | 5.89% |
| 2010 | 21.3% | 12.07% |
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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| RSP | $10,000 | $38,664 | 13.79% |
| HYG | $10,000 | $19,427 | 6.42% |
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.
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