VEU vs. RSP: What’s The Difference?

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

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

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

Summary

VEU RSP
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares Invesco S&P 500 Equal Weight ETF
Category Foreign Large Blend Large Blend
Issuer Vanguard Invesco
AUM 53.64B 28.62B
Avg. Return 6.64% 13.79%
Div. Yield 2.31% 1.31%
Expense Ratio 0.08% 0.2%

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.

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%.

VEU’s dividend yield is 1.00% higher than that of RSP (2.31% vs. 1.31%). Also, VEU yielded on average 7.15% less per year over the past decade (6.64% vs. 13.79%). The expense ratio of VEU is 0.12 percentage points lower than RSP’s (0.08% vs. 0.2%).

Fund Composition

Industry Exposure

VEU vs. RSP - Industry Exposure

VEU RSP
Technology 12.94% 14.73%
Industrials 12.19% 14.62%
Energy 4.69% 3.9%
Communication Services 7.44% 4.31%
Utilities 2.89% 5.58%
Healthcare 9.34% 13.69%
Consumer Defensive 8.28% 6.86%
Real Estate 3.04% 5.84%
Financial Services 18.46% 13.43%
Consumer Cyclical 12.57% 13.01%
Basic Materials 8.17% 4.04%

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.

VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.

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%.

VEU is 5.03% more exposed to the Financial Services sector than RSP (18.46% vs 13.43%). VEU’s exposure to Technology and Consumer Cyclical stocks is 1.79% lower and 0.44% lower respectively (12.94% vs. 14.73% and 12.57% vs. 13.01%). In total, Real Estate, Energy, and Communication Services also make up 1.12% more of the fund’s holdings compared to RSP (15.17% vs. 14.05%).

Holdings

VEU - Holdings

VEU Holdings Weight
Tencent Holdings Ltd 1.57%
Alibaba Group Holding Ltd Ordinary Shares 1.4%
Nestle SA 1.22%
Taiwan Semiconductor Manufacturing Co Ltd 0.98%
ASML Holding NV 0.95%
Taiwan Semiconductor Manufacturing Co Ltd ADR 0.91%
Roche Holding AG 0.91%
Toyota Motor Corp 0.75%
LVMH Moet Hennessy Louis Vuitton SE 0.68%
Novartis AG 0.67%

VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.

Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.

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

VEU RSP
Mean Return 0.56 1.19
R-squared 98.44 94.47
Std. Deviation 15.08 15.36
Alpha 0.28 -2.45
Beta 0.99 1.1
Sharpe Ratio 0.4 0.89
Treynor Ratio 5.12 12.12

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Sharpe Ratio of 0.4 with a Beta of 0.99 and a Mean Return of 0.56. Its Treynor Ratio is 5.12 while VEU’s Standard Deviation is 15.08. Furthermore, the fund has a R-squared of 98.44 and a Alpha of 0.28.

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

VEU’s Mean Return is 0.63 points lower than that of RSP and its R-squared is 3.97 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than RSP. The Alpha and Beta of VEU are 2.73 points higher and 0.11 points lower than RSP’s Alpha and Beta.

Performance

Annual Returns

VEU vs. RSP - Annual Returns

Year VEU RSP
2020 11.39% 12.75%
2019 21.63% 28.94%
2018 -13.97% -7.77%
2017 27.27% 18.52%
2016 4.77% 14.34%
2015 -4.67% -2.57%
2014 -4.05% 14.02%
2013 14.5% 35.6%
2012 18.55% 17.04%
2011 -14.25% -0.5%
2010 11.85% 21.3%

VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% 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

VEU vs. RSP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
RSP $10,000 $38,664 13.79%

A $10,000 investment in VEU would have resulted in a final balance of $18,507. This is a profit of $8,507 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.64%.

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%.

VEU’s CAGR is 7.15 percentage points lower than that of RSP and as a result, would have yielded $20,157 less on a $10,000 investment. Thus, VEU performed worse than RSP by 7.15% annually.


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