RSP vs. XLY: What’s The Difference?

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

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

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

Summary

RSP XLY
Name Invesco S&P 500 Equal Weight ETF Consumer Discretionary Select Sector SPDR Fund
Category Large Blend Consumer Cyclical
Issuer Invesco SPDR State Street Global Advisors
AUM 28.62B 20.21B
Avg. Return 13.79% 18.86%
Div. Yield 1.31% 0.63%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

RSP’s dividend yield is 0.68% higher than that of XLY (1.31% vs. 0.63%). Also, RSP yielded on average 5.07% less per year over the past decade (13.79% vs. 18.86%). The expense ratio of RSP is 0.08 percentage points higher than XLY’s (0.2% vs. 0.12%).

Fund Composition

Industry Exposure

RSP vs. XLY - Industry Exposure

RSP XLY
Technology 14.73% 0.57%
Industrials 14.62% 0.0%
Energy 3.9% 0.0%
Communication Services 4.31% 0.0%
Utilities 5.58% 0.0%
Healthcare 13.69% 0.0%
Consumer Defensive 6.86% 5.34%
Real Estate 5.84% 0.0%
Financial Services 13.43% 0.0%
Consumer Cyclical 13.01% 94.1%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

RSP is 14.16% more exposed to the Technology sector than XLY (14.73% vs 0.57%). 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 13.93% more of the fund’s holdings compared to XLY (13.93% vs. 0.00%).

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%.

XLY - Holdings

XLY Holdings Weight
Amazon.com Inc 22.9%
Tesla Inc 13.5%
The Home Depot Inc 8.74%
McDonald’s Corp 4.5%
Nike Inc B 4.45%
Lowe’s Companies Inc 3.58%
Starbucks Corp 3.44%
Target Corp 3.12%
Booking Holdings Inc 2.35%
TJX Companies Inc 2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

Risk Analysis

RSP XLY
Mean Return 1.19 1.47
R-squared 94.47 80.84
Std. Deviation 15.36 15.97
Alpha -2.45 6.96
Beta 1.1 1.02
Sharpe Ratio 0.89 1.06
Treynor Ratio 12.12 16.69

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

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Beta of 1.02 with a Treynor Ratio of 16.69 and a Mean Return of 1.47. Its Sharpe Ratio is 1.06 while XLY’s Alpha is 6.96. Furthermore, the fund has a Standard Deviation of 15.97 and a R-squared of 80.84.

RSP’s Mean Return is 0.28 points lower than that of XLY and its R-squared is 13.63 points higher. With a Standard Deviation of 15.36, RSP is slightly less volatile than XLY. The Alpha and Beta of RSP are 9.41 points lower and 0.08 points higher than XLY’s Alpha and Beta.

Performance

Annual Returns

RSP vs. XLY - Annual Returns

Year RSP XLY
2020 12.75% 29.66%
2019 28.94% 28.43%
2018 -7.77% 1.66%
2017 18.52% 22.77%
2016 14.34% 5.87%
2015 -2.57% 9.93%
2014 14.02% 9.49%
2013 35.6% 42.74%
2012 17.04% 23.6%
2011 -0.5% 5.98%
2010 21.3% 27.36%

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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.

Portfolio Growth

RSP vs. XLY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
RSP $10,000 $38,664 13.79%
XLY $10,000 $63,066 18.86%

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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.

RSP’s CAGR is 5.07 percentage points lower than that of XLY and as a result, would have yielded $24,402 less on a $10,000 investment. Thus, RSP performed worse than XLY by 5.07% annually.


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