RSP vs. PFF: What’s The Difference?

The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between RSP and PFF? And which fund is better?

The expense ratio of RSP is 0.26 percentage points lower than PFF’s (0.2% vs. 0.46%). RSP also has a higher exposure to the technology sector and a higher standard deviation. Overall, RSP has provided higher returns than PFF over the past ten years.

In this article, we’ll compare RSP vs. PFF. We’ll look at portfolio growth and holdings, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss RSP’s and PFF’s performance, annual returns, and industry exposure and examine how these affect their overall returns.

Summary

RSP PFF
Name Invesco S&P 500 Equal Weight ETF iShares Preferred and Income Securities ETF
Category Large Blend Preferred Stock
Issuer Invesco iShares
AUM 28.62B 19.8B
Avg. Return 13.79% 6.90%
Div. Yield 1.31% 4.47%
Expense Ratio 0.2% 0.46%

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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

RSP’s dividend yield is 3.16% lower than that of PFF (1.31% vs. 4.47%). Also, RSP yielded on average 6.89% more per year over the past decade (13.79% vs. 6.90%). The expense ratio of RSP is 0.26 percentage points lower than PFF’s (0.2% vs. 0.46%).

Fund Composition

Industry Exposure

RSP vs. PFF - Industry Exposure

RSP PFF
Technology 14.73% 0.0%
Industrials 14.62% 10.27%
Energy 3.9% 0.0%
Communication Services 4.31% 0.0%
Utilities 5.58% 81.81%
Healthcare 13.69% 3.54%
Consumer Defensive 6.86% 0.0%
Real Estate 5.84% 0.65%
Financial Services 13.43% 0.0%
Consumer Cyclical 13.01% 0.0%
Basic Materials 4.04% 3.74%

The Invesco S&P 500 Equal Weight ETF (RSP) has the most exposure to the Technology sector at 14.73%. This is followed by Industrials and Healthcare at 14.62% and 13.69% respectively. Basic Materials (4.04%), Communication Services (4.31%), and Utilities (5.58%) only make up 13.93% of the fund’s total assets.

RSP’s mid-section with moderate exposure is comprised of Real Estate, Consumer Defensive, Consumer Cyclical, Financial Services, and Healthcare stocks at 5.84%, 6.86%, 13.01%, 13.43%, and 13.69%.

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

RSP is 14.73% more exposed to the Technology sector than PFF (14.73% vs 0.0%). RSP’s exposure to Industrials and Healthcare stocks is 4.35% higher and 10.15% higher respectively (14.62% vs. 10.27% and 13.69% vs. 3.54%). In total, Basic Materials, Communication Services, and Utilities also make up 71.62% less of the fund’s holdings compared to PFF (13.93% vs. 85.55%).

Holdings

RSP - 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%.

PFF - Holdings

PFF Holdings Weight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A 2.54%
BlackRock Cash Funds Treasury SL Agency 2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L- 1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L- 1.49%
ArcelorMittal S.A. 5.5% 1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A 1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B 1.14%
NextEra Energy Inc Unit 1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 1.08%
Avantor Inc Ser A 0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

Risk Analysis

RSP PFF
Mean Return 1.19 0.52
R-squared 94.47 9.39
Std. Deviation 15.36 7.87
Alpha -2.45 3.45
Beta 1.1 0.81
Sharpe Ratio 0.89 0.72
Treynor Ratio 12.12 6.79

The Invesco S&P 500 Equal Weight ETF (RSP) has a Sharpe Ratio of 0.89 with a Alpha of -2.45 and a Standard Deviation of 15.36. Its Beta is 1.1 while RSP’s Mean Return is 1.19. Furthermore, the fund has a Treynor Ratio of 12.12 and a R-squared of 94.47.

The iShares Preferred and Income Securities ETF (PFF) has a Sharpe Ratio of 0.72 with a Mean Return of 0.52 and a Alpha of 3.45. Its Standard Deviation is 7.87 while PFF’s Beta is 0.81. Furthermore, the fund has a R-squared of 9.39 and a Treynor Ratio of 6.79.

RSP’s Mean Return is 0.67 points higher than that of PFF and its R-squared is 85.08 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than PFF. The Alpha and Beta of RSP are 5.90 points lower and 0.29 points higher than PFF’s Alpha and Beta.

Performance

Annual Returns

RSP vs. PFF - Annual Returns

Year RSP PFF
2020 12.75% 7.94%
2019 28.94% 15.62%
2018 -7.77% -4.77%
2017 18.52% 8.33%
2016 14.34% 1.26%
2015 -2.57% 4.62%
2014 14.02% 13.45%
2013 35.6% -0.59%
2012 17.04% 18.25%
2011 -0.5% -2.2%
2010 21.3% 13.96%

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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

RSP vs. PFF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
RSP $10,000 $38,664 13.79%
PFF $10,000 $20,272 6.90%

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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.

RSP’s CAGR is 6.89 percentage points higher than that of PFF and as a result, would have yielded $18,392 more on a $10,000 investment. Thus, RSP outperformed PFF by 6.89% annually.


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