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RSP vs. SHY: What’s The Difference?

The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and SHY is a iShares Short Government fund. So, what’s the difference between RSP and SHY? And which fund is better?

The expense ratio of RSP is 0.05 percentage points higher than SHY’s (0.2% vs. 0.15%). RSP also has a high exposure to the technology sector while SHY is mostly comprised of AAA bonds. Overall, RSP has provided higher returns than SHY over the past ten years.

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

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Summary

RSPSHY
NameInvesco S&P 500 Equal Weight ETFiShares 1-3 Year Treasury Bond ETF
CategoryLarge BlendShort Government
IssuerInvescoiShares
AUM28.62B19.51B
Avg. Return13.79%1.27%
Div. Yield1.31%0.46%
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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.

RSP’s dividend yield is 0.85% higher than that of SHY (1.31% vs. 0.46%). Also, RSP yielded on average 12.51% more per year over the past decade (13.79% vs. 1.27%). The expense ratio of RSP is 0.05 percentage points higher than SHY’s (0.2% vs. 0.15%).

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Fund Composition

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%.

SHY - Holdings

SHY Bond SectorsWeight
AAA99.67%
Others0.33%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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.

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Risk Analysis

RSPSHY
Mean Return1.190.09
R-squared94.4739.11
Std. Deviation15.360.89
Alpha-2.45-0.03
Beta1.10.18
Sharpe Ratio0.890.54
Treynor Ratio12.122.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Mean Return of 0.09 with a Treynor Ratio of 2.6 and a Standard Deviation of 0.89. Its Sharpe Ratio is 0.54 while SHY’s Beta is 0.18. Furthermore, the fund has a R-squared of 39.11 and a Alpha of -0.03.

RSP’s Mean Return is 1.10 points higher than that of SHY and its R-squared is 55.36 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than SHY. The Alpha and Beta of RSP are 2.42 points lower and 0.92 points higher than SHY’s Alpha and Beta.

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Performance

Annual Returns

RSP vs. SHY - Annual Returns

YearRSPSHY
202012.75%3.01%
201928.94%3.42%
2018-7.77%1.45%
201718.52%0.27%
201614.34%0.75%
2015-2.57%0.43%
201414.02%0.48%
201335.6%0.23%
201217.04%0.31%
2011-0.5%1.43%
201021.3%2.23%

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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.

Portfolio Growth

RSP vs. SHY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
RSP$10,000$38,66413.79%
SHY$10,000$11,4861.27%

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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.

RSP’s CAGR is 12.51 percentage points higher than that of SHY and as a result, would have yielded $27,178 more on a $10,000 investment. Thus, RSP outperformed SHY by 12.51% annually.


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