The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and RSP is a Invesco Large Blend fund. So, what’s the difference between VGT and RSP? And which fund is better?
The expense ratio of VGT is 0.10 percentage points lower than RSP’s (0.1% vs. 0.2%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than RSP over the past ten years.
In this article, we’ll compare VGT vs. RSP. We’ll look at holdings and performance, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VGT’s and RSP’s portfolio growth, annual returns, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Information Technology Index Fund ETF Shares||Invesco S&P 500 Equal Weight ETF|
The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
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%.
VGT’s dividend yield is 0.65% lower than that of RSP (0.66% vs. 1.31%). Also, VGT yielded on average 7.05% more per year over the past decade (20.84% vs. 13.79%). The expense ratio of VGT is 0.10 percentage points lower than RSP’s (0.1% vs. 0.2%).
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The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
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%.
VGT is 74.16% more exposed to the Technology sector than RSP (88.89% vs 14.73%). VGT’s exposure to Financial Services and Industrials stocks is 4.60% lower and 12.95% lower respectively (8.83% vs. 13.43% and 1.67% vs. 14.62%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 25.71% less of the fund’s holdings compared to RSP (0.00% vs. 25.71%).
|Visa Inc Class A||3.16%|
|PayPal Holdings Inc||2.76%|
|Mastercard Inc Class A||2.76%|
|Cisco Systems Inc||1.9%|
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
|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%.
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The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Alpha of 10.41 with a Standard Deviation of 16.61 and a Beta of 1.02. Its R-squared is 74.84 while VGT’s Treynor Ratio is 20.55. Furthermore, the fund has a Mean Return of 1.76 and a Sharpe Ratio of 1.23.
The Invesco S&P 500 Equal Weight ETF (RSP) has a Standard Deviation of 15.36 with a Treynor Ratio of 12.12 and a Beta of 1.1. Its R-squared is 94.47 while RSP’s Sharpe Ratio is 0.89. Furthermore, the fund has a Mean Return of 1.19 and a Alpha of -2.45.
VGT’s Mean Return is 0.57 points higher than that of RSP and its R-squared is 19.63 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than RSP. The Alpha and Beta of VGT are 12.86 points higher and 0.08 points lower than RSP’s Alpha and Beta.
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VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VGT would have resulted in a final balance of $72,718. This is a profit of $62,718 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.84%.
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%.
VGT’s CAGR is 7.05 percentage points higher than that of RSP and as a result, would have yielded $34,054 more on a $10,000 investment. Thus, VGT outperformed RSP by 7.05% annually.
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