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RSP vs. QUAL: What’s The Difference?

The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares MSCI USA Quality Factor ETF (QUAL) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and QUAL is a iShares Large Blend fund. So, what’s the difference between RSP and QUAL? And which fund is better?

The expense ratio of RSP is 0.05 percentage points higher than QUAL’s (0.2% vs. 0.15%). RSP also has a lower exposure to the technology sector and a higher standard deviation. Overall, RSP has provided higher returns than QUAL over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

RSPQUAL
NameInvesco S&P 500 Equal Weight ETFiShares MSCI USA Quality Factor ETF
CategoryLarge BlendLarge Blend
IssuerInvescoiShares
AUM28.62B23.93B
Avg. Return13.79%13.42%
Div. Yield1.31%1.29%
Expense Ratio0.2%0.15%

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 MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.

RSP’s dividend yield is 0.02% higher than that of QUAL (1.31% vs. 1.29%). Also, RSP yielded on average 0.37% more per year over the past decade (13.79% vs. 13.42%). The expense ratio of RSP is 0.05 percentage points higher than QUAL’s (0.2% vs. 0.15%).

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Fund Composition

Industry Exposure

RSP vs. QUAL - Industry Exposure

RSPQUAL
Technology14.73%22.52%
Industrials14.62%9.22%
Energy3.9%2.24%
Communication Services4.31%11.44%
Utilities5.58%2.41%
Healthcare13.69%13.22%
Consumer Defensive6.86%8.57%
Real Estate5.84%2.72%
Financial Services13.43%15.87%
Consumer Cyclical13.01%9.43%
Basic Materials4.04%2.35%

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 MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.

QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.

RSP is 7.79% less exposed to the Technology sector than QUAL (14.73% vs 22.52%). RSP’s exposure to Industrials and Healthcare stocks is 5.40% higher and 0.47% higher respectively (14.62% vs. 9.22% and 13.69% vs. 13.22%). In total, Basic Materials, Communication Services, and Utilities also make up 2.27% less of the fund’s holdings compared to QUAL (13.93% vs. 16.20%).

Holdings

RSP - Holdings

RSP HoldingsWeight
Chipotle Mexican Grill Inc0.27%
Nike Inc Class B0.25%
MSCI Inc0.25%
Monolithic Power Systems Inc0.25%
Enphase Energy Inc0.25%
Advanced Micro Devices Inc0.25%
ResMed Inc0.24%
PerkinElmer Inc0.24%
IDEXX Laboratories Inc0.24%
Danaher Corp0.24%

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%.

QUAL - Holdings

QUAL HoldingsWeight
Facebook Inc Class A4.77%
Nike Inc Class B4.05%
Microsoft Corp3.54%
Apple Inc3.52%
Johnson & Johnson2.99%
BlackRock Inc2.87%
Target Corp2.8%
Mastercard Inc Class A2.72%
NVIDIA Corp2.71%
Alphabet Inc Class A2.49%

QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.

BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.

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Risk Analysis

RSPQUAL
Mean Return1.190
R-squared94.470
Std. Deviation15.360
Alpha-2.450
Beta1.10
Sharpe Ratio0.890
Treynor Ratio12.120

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

The iShares MSCI USA Quality Factor ETF (QUAL) has a Mean Return of 0 with a Standard Deviation of 0 and a Alpha of 0. Its R-squared is 0 while QUAL’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Beta of 0.

RSP’s Mean Return is 1.19 points higher than that of QUAL and its R-squared is 94.47 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than QUAL. The Alpha and Beta of RSP are 2.45 points lower and 1.10 points higher than QUAL’s Alpha and Beta.

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Performance

Annual Returns

RSP vs. QUAL - Annual Returns

YearRSPQUAL
202012.75%16.96%
201928.94%34.14%
2018-7.77%-5.77%
201718.52%22.26%
201614.34%9.18%
2015-2.57%5.56%
201414.02%11.62%
201335.6%0.0%
201217.04%0.0%
2011-0.5%0.0%
201021.3%0.0%

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 QUAL, returning 34.14% on an annual basis. The poorest year for QUAL in the last ten years was 2018, with a yield of -5.77%. Most years the iShares MSCI USA Quality Factor ETF has given investors modest returns, such as in 2010, 2015, and 2016, when gains were 0.0%, 5.56%, and 9.18% respectively.

Portfolio Growth

RSP vs. QUAL - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
RSP$10,000$20,18513.79%
QUAL$10,000$23,25113.42%

A $10,000 investment in RSP would have resulted in a final balance of $20,185. This is a profit of $10,185 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.79%.

With a $10,000 investment in QUAL, the end total would have been $23,251. This equates to a $13,251 profit over 7 years and a compound annual growth rate (CAGR) of 13.42%.

RSP’s CAGR is 0.37 percentage points higher than that of QUAL and as a result, would have yielded $3,066 less on a $10,000 investment. Thus, RSP outperformed QUAL by 0.37% annually.


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