The Invesco S&P 500 Equal Weight ETF (RSP) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between RSP and TLT? And which fund is better?
The expense ratio of RSP is 0.05 percentage points higher than TLT’s (0.2% vs. 0.15%). RSP also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, RSP has provided higher returns than TLT over the past ten years.
In this article, we’ll compare RSP vs. TLT. We’ll look at holdings and fund composition, as well as at their risk metrics and performance. Moreover, I’ll also discuss RSP’s and TLT’s annual returns, industry exposure, and portfolio growth and examine how these affect their overall returns.
Summary
| RSP | TLT | |
| Name | Invesco S&P 500 Equal Weight ETF | iShares 20+ Year Treasury Bond ETF |
| Category | Large Blend | Long Government |
| Issuer | Invesco | iShares |
| AUM | 28.62B | 15.15B |
| Avg. Return | 13.79% | 9.00% |
| Div. Yield | 1.31% | 1.5% |
| Expense Ratio | 0.2% | 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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
RSP’s dividend yield is 0.19% lower than that of TLT (1.31% vs. 1.5%). Also, RSP yielded on average 4.79% more per year over the past decade (13.79% vs. 9.00%). The expense ratio of RSP is 0.05 percentage points higher than TLT’s (0.2% vs. 0.15%).
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%.
| TLT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.
Risk Analysis
| RSP | TLT | |
| Mean Return | 1.19 | 0.63 |
| R-squared | 94.47 | 68.76 |
| Std. Deviation | 15.36 | 12.76 |
| Alpha | -2.45 | -2.83 |
| Beta | 1.1 | 3.54 |
| Sharpe Ratio | 0.89 | 0.55 |
| Treynor Ratio | 12.12 | 1.82 |
The Invesco S&P 500 Equal Weight ETF (RSP) has a Mean Return of 1.19 with a Standard Deviation of 15.36 and a Alpha of -2.45. Its Beta is 1.1 while RSP’s Treynor Ratio is 12.12. Furthermore, the fund has a Sharpe Ratio of 0.89 and a R-squared of 94.47.
The iShares 20+ Year Treasury Bond ETF (TLT) has a R-squared of 68.76 with a Mean Return of 0.63 and a Standard Deviation of 12.76. Its Treynor Ratio is 1.82 while TLT’s Beta is 3.54. Furthermore, the fund has a Alpha of -2.83 and a Sharpe Ratio of 0.55.
RSP’s Mean Return is 0.56 points higher than that of TLT and its R-squared is 25.71 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than TLT. The Alpha and Beta of RSP are 0.38 points higher and 2.44 points lower than TLT’s Alpha and Beta.
Performance
Annual Returns
| Year | RSP | TLT |
| 2020 | 12.75% | 17.92% |
| 2019 | 28.94% | 14.93% |
| 2018 | -7.77% | -2.07% |
| 2017 | 18.52% | 8.92% |
| 2016 | 14.34% | 1.36% |
| 2015 | -2.57% | -1.65% |
| 2014 | 14.02% | 27.35% |
| 2013 | 35.6% | -13.91% |
| 2012 | 17.04% | 3.25% |
| 2011 | -0.5% | 33.6% |
| 2010 | 21.3% | 9.25% |
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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| RSP | $10,000 | $38,664 | 13.79% |
| TLT | $10,000 | $23,809 | 9.00% |
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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.
RSP’s CAGR is 4.79 percentage points higher than that of TLT and as a result, would have yielded $14,855 more on a $10,000 investment. Thus, RSP outperformed TLT by 4.79% annually.
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