The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between RSP and IEF? And which fund is better?
The expense ratio of RSP is 0.05 percentage points higher than IEF’s (0.2% vs. 0.15%). RSP also has a high exposure to the technology sector while IEF is mostly comprised of AAA bonds. Overall, RSP has provided higher returns than IEF over the past ten years.
In this article, we’ll compare RSP vs. IEF. We’ll look at performance and portfolio growth, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss RSP’s and IEF’s holdings, risk metrics, and fund composition and examine how these affect their overall returns.
|Name||Invesco S&P 500 Equal Weight ETF||iShares 7-10 Year Treasury Bond ETF|
|Category||Large Blend||Long 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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.
RSP’s dividend yield is 0.47% higher than that of IEF (1.31% vs. 0.84%). Also, RSP yielded on average 8.73% more per year over the past decade (13.79% vs. 5.06%). The expense ratio of RSP is 0.05 percentage points higher than IEF’s (0.2% vs. 0.15%).
|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%.
|IEF Bond Sectors||Weight|
IEF’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.
The Invesco S&P 500 Equal Weight ETF (RSP) has a Mean Return of 1.19 with a Standard Deviation of 15.36 and a R-squared of 94.47. Its Alpha is -2.45 while RSP’s Treynor Ratio is 12.12. Furthermore, the fund has a Sharpe Ratio of 0.89 and a Beta of 1.1.
The iShares 7-10 Year Treasury Bond ETF (IEF) has a Mean Return of 0.32 with a Sharpe Ratio of 0.6 and a Beta of 1.59. Its Standard Deviation is 5.42 while IEF’s Alpha is -1.2. Furthermore, the fund has a Treynor Ratio of 1.97 and a R-squared of 77.56.
RSP’s Mean Return is 0.87 points higher than that of IEF and its R-squared is 16.91 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than IEF. The Alpha and Beta of RSP are 1.25 points lower and 0.49 points lower than IEF’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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% 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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.
RSP’s CAGR is 8.73 percentage points higher than that of IEF and as a result, would have yielded $21,728 more on a $10,000 investment. Thus, RSP outperformed IEF by 8.73% annually.
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