VCIT vs. RSP: What’s The Difference?

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and RSP is a Invesco Large Blend fund. So, what’s the difference between VCIT and RSP? And which fund is better?

The expense ratio of VCIT is 0.15 percentage points lower than RSP’s (0.05% vs. 0.2%). VCIT is mostly comprised of BBB bonds while RSP has a high exposure to the technology sector. Overall, VCIT has provided lower returns than RSP over the past ten years.

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

Summary

VCIT RSP
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Invesco S&P 500 Equal Weight ETF
Category Corporate Bond Large Blend
Issuer Vanguard Invesco
AUM 48.39B 28.62B
Avg. Return 5.84% 13.79%
Div. Yield 2.33% 1.31%
Expense Ratio 0.05% 0.2%

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.

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%.

VCIT’s dividend yield is 1.02% higher than that of RSP (2.33% vs. 1.31%). Also, VCIT yielded on average 7.95% less per year over the past decade (5.84% vs. 13.79%). The expense ratio of VCIT is 0.15 percentage points lower than RSP’s (0.05% vs. 0.2%).

Fund Composition

Holdings

VCIT - Holdings

VCIT Bond Sectors Weight
BBB 55.28%
A 37.85%
AA 5.22%
AAA 1.57%
Below B 0.08%
Others 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.

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%.

Risk Analysis

VCIT RSP
Mean Return 0.44 1.19
R-squared 63.18 94.47
Std. Deviation 5.08 15.36
Alpha 0.89 -2.45
Beta 1.35 1.1
Sharpe Ratio 0.91 0.89
Treynor Ratio 3.43 12.12

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Beta of 1.35 with a Alpha of 0.89 and a Standard Deviation of 5.08. Its R-squared is 63.18 while VCIT’s Mean Return is 0.44. Furthermore, the fund has a Sharpe Ratio of 0.91 and a Treynor Ratio of 3.43.

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

VCIT’s Mean Return is 0.75 points lower than that of RSP and its R-squared is 31.29 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than RSP. The Alpha and Beta of VCIT are 3.34 points higher and 0.25 points higher than RSP’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. RSP - Annual Returns

Year VCIT RSP
2020 9.55% 12.75%
2019 13.97% 28.94%
2018 -1.75% -7.77%
2017 5.5% 18.52%
2016 5.3% 14.34%
2015 0.88% -2.57%
2014 7.47% 14.02%
2013 -1.8% 35.6%
2012 11.36% 17.04%
2011 7.94% -0.5%
2010 10.65% 21.3%

VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% respectively.

The year 2013 was the strongest year for RSP, returning 35.6% on an annual basis. The poorest year for RSP in the last ten years was 2018, with a yield of -7.77%. Most years the Invesco S&P 500 Equal Weight ETF has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 14.02%, 14.34%, and 17.04% respectively.

Portfolio Growth

VCIT vs. RSP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
RSP $10,000 $31,875 13.79%

A $10,000 investment in VCIT would have resulted in a final balance of $17,439. This is a profit of $7,439 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.84%.

With a $10,000 investment in RSP, the end total would have been $31,875. This equates to a $21,875 profit over 10 years and a compound annual growth rate (CAGR) of 13.79%.

VCIT’s CAGR is 7.95 percentage points lower than that of RSP and as a result, would have yielded $14,436 less on a $10,000 investment. Thus, VCIT performed worse than RSP by 7.95% annually.


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