VEA vs. RSP: What’s The Difference?

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and RSP is a Invesco Large Blend fund. So, what’s the difference between VEA and RSP? And which fund is better?

The expense ratio of VEA is 0.15 percentage points lower than RSP’s (0.05% vs. 0.2%). VEA also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEA has provided lower returns than RSP over the past ten years.

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

Summary

VEA RSP
Name Vanguard FTSE Developed Markets Index Fund ETF Shares Invesco S&P 500 Equal Weight ETF
Category Foreign Large Blend Large Blend
Issuer Vanguard Invesco
AUM 157.48B 28.62B
Avg. Return 7.05% 13.79%
Div. Yield 2.49% 1.31%
Expense Ratio 0.05% 0.2%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% 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%.

VEA’s dividend yield is 1.18% higher than that of RSP (2.49% vs. 1.31%). Also, VEA yielded on average 6.74% less per year over the past decade (7.05% vs. 13.79%). The expense ratio of VEA is 0.15 percentage points lower than RSP’s (0.05% vs. 0.2%).

Fund Composition

Industry Exposure

VEA vs. RSP - Industry Exposure

VEA RSP
Technology 11.67% 14.73%
Industrials 15.47% 14.62%
Energy 4.17% 3.9%
Communication Services 5.41% 4.31%
Utilities 3.1% 5.58%
Healthcare 10.6% 13.69%
Consumer Defensive 8.61% 6.86%
Real Estate 4.04% 5.84%
Financial Services 17.39% 13.43%
Consumer Cyclical 11.31% 13.01%
Basic Materials 8.24% 4.04%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) has the most exposure to the Financial Services sector at 17.39%. This is followed by Industrials and Technology at 15.47% and 11.67% respectively. Real Estate (4.04%), Energy (4.17%), and Communication Services (5.41%) only make up 13.62% of the fund’s total assets.

VEA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Consumer Cyclical, and Technology stocks at 8.24%, 8.61%, 10.6%, 11.31%, and 11.67%.

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%.

VEA is 3.96% more exposed to the Financial Services sector than RSP (17.39% vs 13.43%). VEA’s exposure to Industrials and Technology stocks is 0.85% higher and 3.06% lower respectively (15.47% vs. 14.62% and 11.67% vs. 14.73%). In total, Real Estate, Energy, and Communication Services also make up 0.43% less of the fund’s holdings compared to RSP (13.62% vs. 14.05%).

Holdings

VEA - Holdings

VEA Holdings Weight
Nestle SA 1.5%
Samsung Electronics Co Ltd 1.4%
ASML Holding NV 1.16%
Roche Holding AG 1.1%
Toyota Motor Corp 0.92%
LVMH Moet Hennessy Louis Vuitton SE 0.84%
Novartis AG 0.82%
Shopify Inc A 0.7%
AstraZeneca PLC 0.67%
SAP SE 0.66%

VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.

LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.

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%.

Performance

Annual Returns

VEA vs. RSP - Annual Returns

Year VEA RSP
2020 10.29% 12.75%
2019 22.08% 28.94%
2018 -14.47% -7.77%
2017 26.44% 18.52%
2016 2.51% 14.34%
2015 -0.21% -2.57%
2014 -5.71% 14.02%
2013 22.12% 35.6%
2012 18.6% 17.04%
2011 -12.57% -0.5%
2010 8.47% 21.3%

VEA had its best year in 2017 with an annual return of 26.44%. VEA’s worst year over the past decade yielded -14.47% and occurred in 2018. In most years the Vanguard FTSE Developed Markets Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.51%, 8.47%, and 10.29% 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

VEA vs. RSP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $19,290 7.05%
RSP $10,000 $38,664 13.79%

A $10,000 investment in VEA would have resulted in a final balance of $19,290. This is a profit of $9,290 over 11 years and amounts to a compound annual growth rate (CAGR) of 7.05%.

With a $10,000 investment in RSP, the end total would have been $38,664. This equates to a $28,664 profit over 11 years and a compound annual growth rate (CAGR) of 13.79%.

VEA’s CAGR is 6.74 percentage points lower than that of RSP and as a result, would have yielded $19,374 less on a $10,000 investment. Thus, VEA performed worse than RSP by 6.74% annually.


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