RSP vs. XLC: What’s The Difference?

The Invesco S&P 500 Equal Weight ETF (RSP) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between RSP and XLC? And which fund is better?

The expense ratio of RSP is 0.08 percentage points higher than XLC’s (0.2% vs. 0.12%). RSP also has a higher exposure to the technology sector and a higher standard deviation. Overall, RSP has provided lower returns than XLC over the past ten years.

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

Summary

RSP XLC
Name Invesco S&P 500 Equal Weight ETF Communication Services Select Sector SPDR Fund
Category Large Blend Communications
Issuer Invesco SPDR State Street Global Advisors
AUM 28.62B 14.09B
Avg. Return 13.79% 29.04%
Div. Yield 1.31% 0.62%
Expense Ratio 0.2% 0.12%

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 Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.

RSP’s dividend yield is 0.69% higher than that of XLC (1.31% vs. 0.62%). Also, RSP yielded on average 15.25% less per year over the past decade (13.79% vs. 29.04%). The expense ratio of RSP is 0.08 percentage points higher than XLC’s (0.2% vs. 0.12%).

Fund Composition

Industry Exposure

RSP vs. XLC - Industry Exposure

RSP XLC
Technology 14.73% 0.0%
Industrials 14.62% 0.0%
Energy 3.9% 0.0%
Communication Services 4.31% 100.0%
Utilities 5.58% 0.0%
Healthcare 13.69% 0.0%
Consumer Defensive 6.86% 0.0%
Real Estate 5.84% 0.0%
Financial Services 13.43% 0.0%
Consumer Cyclical 13.01% 0.0%
Basic Materials 4.04% 0.0%

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 Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

RSP is 14.73% more exposed to the Technology sector than XLC (14.73% vs 0.0%). RSP’s exposure to Industrials and Healthcare stocks is 14.62% higher and 13.69% higher respectively (14.62% vs. 0.0% and 13.69% vs. 0.0%). In total, Basic Materials, Communication Services, and Utilities also make up 86.07% less of the fund’s holdings compared to XLC (13.93% vs. 100.00%).

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%.

XLC - Holdings

XLC Holdings Weight
Facebook Inc A 23.75%
Alphabet Inc A 11.49%
Alphabet Inc Class C 11.16%
Netflix Inc 4.78%
Charter Communications Inc A 4.65%
Comcast Corp Class A 4.44%
T-Mobile US Inc 4.41%
The Walt Disney Co 4.39%
AT&T Inc 4.35%
Verizon Communications Inc 4.33%

XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.

Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.

Risk Analysis

RSP XLC
Mean Return 1.19 0
R-squared 94.47 0
Std. Deviation 15.36 0
Alpha -2.45 0
Beta 1.1 0
Sharpe Ratio 0.89 0
Treynor Ratio 12.12 0

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 Beta of 1.1. Its Treynor Ratio is 12.12 while RSP’s Alpha is -2.45. Furthermore, the fund has a R-squared of 94.47 and a Standard Deviation of 15.36.

The Communication Services Select Sector SPDR Fund (XLC) has a Alpha of 0 with a Beta of 0 and a Mean Return of 0. Its Standard Deviation is 0 while XLC’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.

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

Performance

Annual Returns

RSP vs. XLC - Annual Returns

Year RSP XLC
2020 12.75% 26.85%
2019 28.94% 31.22%
2018 -7.77% 0.0%
2017 18.52% 0.0%
2016 14.34% 0.0%
2015 -2.57% 0.0%
2014 14.02% 0.0%
2013 35.6% 0.0%
2012 17.04% 0.0%
2011 -0.5% 0.0%
2010 21.3% 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 XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

RSP vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
RSP $10,000 $14,537 13.79%
XLC $10,000 $16,645 29.04%

A $10,000 investment in RSP would have resulted in a final balance of $14,537. This is a profit of $4,537 over 2 years and amounts to a compound annual growth rate (CAGR) of 13.79%.

With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.

RSP’s CAGR is 15.25 percentage points lower than that of XLC and as a result, would have yielded $2,108 less on a $10,000 investment. Thus, RSP performed worse than XLC by 15.25% annually.


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