The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between RSP and IGSB? And which fund is better?
The expense ratio of RSP is 0.14 percentage points higher than IGSB’s (0.2% vs. 0.06%). RSP also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, RSP has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare RSP vs. IGSB. We’ll look at annual returns and performance, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss RSP’s and IGSB’s fund composition, portfolio growth, and holdings and examine how these affect their overall returns.
Summary
| RSP | IGSB | |
| Name | Invesco S&P 500 Equal Weight ETF | iShares 1-5 Year Investment Grade Corporate Bond ETF |
| Category | Large Blend | Short-Term Bond |
| Issuer | Invesco | iShares |
| AUM | 28.62B | 26.63B |
| Avg. Return | 13.79% | 2.51% |
| Div. Yield | 1.31% | 2.02% |
| Expense Ratio | 0.2% | 0.06% |
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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
RSP’s dividend yield is 0.71% lower than that of IGSB (1.31% vs. 2.02%). Also, RSP yielded on average 11.28% more per year over the past decade (13.79% vs. 2.51%). The expense ratio of RSP is 0.14 percentage points higher than IGSB’s (0.2% vs. 0.06%).
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%.
| IGSB Bond Sectors | Weight |
| BBB | 50.48% |
| A | 40.04% |
| AA | 7.46% |
| AAA | 2.21% |
| BB | 0.09% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| Others | -0.28% |
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
Risk Analysis
| RSP | IGSB | |
| Mean Return | 1.19 | 0.19 |
| R-squared | 94.47 | 26.13 |
| Std. Deviation | 15.36 | 2 |
| Alpha | -2.45 | 0.69 |
| Beta | 1.1 | 0.34 |
| Sharpe Ratio | 0.89 | 0.82 |
| Treynor Ratio | 12.12 | 4.82 |
The Invesco S&P 500 Equal Weight ETF (RSP) has a Alpha of -2.45 with a Treynor Ratio of 12.12 and a Standard Deviation of 15.36. Its Sharpe Ratio is 0.89 while RSP’s Mean Return is 1.19. Furthermore, the fund has a R-squared of 94.47 and a Beta of 1.1.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Standard Deviation of 2 with a R-squared of 26.13 and a Alpha of 0.69. Its Treynor Ratio is 4.82 while IGSB’s Beta is 0.34. Furthermore, the fund has a Mean Return of 0.19 and a Sharpe Ratio of 0.82.
RSP’s Mean Return is 1.00 points higher than that of IGSB and its R-squared is 68.34 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than IGSB. The Alpha and Beta of RSP are 3.14 points lower and 0.76 points higher than IGSB’s Alpha and Beta.
Performance
Annual Returns
| Year | RSP | IGSB |
| 2020 | 12.75% | 5.26% |
| 2019 | 28.94% | 7.01% |
| 2018 | -7.77% | 1.34% |
| 2017 | 18.52% | 1.41% |
| 2016 | 14.34% | 1.77% |
| 2015 | -2.57% | 0.7% |
| 2014 | 14.02% | 0.74% |
| 2013 | 35.6% | 1.03% |
| 2012 | 17.04% | 3.28% |
| 2011 | -0.5% | 1.34% |
| 2010 | 21.3% | 3.69% |
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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| RSP | $10,000 | $38,664 | 13.79% |
| IGSB | $10,000 | $13,103 | 2.51% |
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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.
RSP’s CAGR is 11.28 percentage points higher than that of IGSB and as a result, would have yielded $25,561 more on a $10,000 investment. Thus, RSP outperformed IGSB by 11.28% annually.
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