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.
|Name||Invesco S&P 500 Equal Weight ETF||iShares 1-3 Year Treasury Bond ETF|
|Category||Large Blend||Short 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 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%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|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%.
|SHY Bond Sectors||Weight|
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.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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.
|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 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.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.