The Invesco S&P 500 Equal Weight ETF (RSP) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. RSP is a Invesco Large Blend fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between RSP and XLV? And which fund is better?
The expense ratio of RSP is 0.08 percentage points higher than XLV’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 XLV over the past ten years.
In this article, we’ll compare RSP vs. XLV. We’ll look at annual returns and holdings, as well as at their performance and risk metrics. Moreover, I’ll also discuss RSP’s and XLV’s portfolio growth, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Invesco S&P 500 Equal Weight ETF||Health Care Select Sector SPDR Fund|
|Issuer||Invesco||SPDR State Street Global Advisors|
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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.
RSP’s dividend yield is 0.09% lower than that of XLV (1.31% vs. 1.4%). Also, RSP yielded on average 1.24% less per year over the past decade (13.79% vs. 15.02%). The expense ratio of RSP is 0.08 percentage points higher than XLV’s (0.2% vs. 0.12%).
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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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.
XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, 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 XLV (14.73% vs 0.0%). RSP’s exposure to Industrials and Healthcare stocks is 14.62% higher and 86.31% lower respectively (14.62% vs. 0.0% and 13.69% vs. 100.0%). In total, Basic Materials, Communication Services, and Utilities also make up 13.93% more of the fund’s holdings compared to XLV (13.93% vs. 0.00%).
|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%.
|Johnson & Johnson||9.19%|
|UnitedHealth Group Inc||8.01%|
|Thermo Fisher Scientific Inc||4.2%|
|Merck & Co Inc||4.17%|
|Eli Lilly and Co||3.87%|
XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.
Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.
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The Invesco S&P 500 Equal Weight ETF (RSP) has a Beta of 1.1 with a Mean Return of 1.19 and a Alpha of -2.45. Its Treynor Ratio is 12.12 while RSP’s Standard Deviation is 15.36. Furthermore, the fund has a Sharpe Ratio of 0.89 and a R-squared of 94.47.
The Health Care Select Sector SPDR Fund (XLV) has a R-squared of 58.19 with a Beta of 0.7 and a Treynor Ratio of 21.1. Its Alpha is 7.75 while XLV’s Standard Deviation is 12.94. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Mean Return of 1.27.
RSP’s Mean Return is 0.08 points lower than that of XLV and its R-squared is 36.28 points higher. With a Standard Deviation of 15.36, RSP is slightly more volatile than XLV. The Alpha and Beta of RSP are 10.20 points lower and 0.40 points higher than XLV’s Alpha and Beta.
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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 2013 was the strongest year for XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% 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 XLV, the end total would have been $44,147. This equates to a $34,147 profit over 11 years and a compound annual growth rate (CAGR) of 15.02%.
RSP’s CAGR is 1.24 percentage points lower than that of XLV and as a result, would have yielded $5,483 less on a $10,000 investment. Thus, RSP performed worse than XLV by 1.24% annually.
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