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VNQ vs. RSP: What’s The Difference?

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

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

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

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Summary

VNQRSP
NameVanguard Real Estate Index Fund ETF SharesInvesco S&P 500 Equal Weight ETF
CategoryReal EstateLarge Blend
IssuerVanguardInvesco
AUM77.34B28.62B
Avg. Return11.05%13.79%
Div. Yield2.34%1.31%
Expense Ratio0.12%0.2%

The Vanguard Real Estate Index Fund ETF Shares (VNQ) is a Real Estate fund that is issued by Vanguard. It currently has 77.34B total assets under management and has yielded an average annual return of 11.05% over the past 10 years. The fund has a dividend yield of 2.34% with an expense ratio of 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%.

VNQ’s dividend yield is 1.03% higher than that of RSP (2.34% vs. 1.31%). Also, VNQ yielded on average 2.74% less per year over the past decade (11.05% vs. 13.79%). The expense ratio of VNQ is 0.08 percentage points lower than RSP’s (0.12% vs. 0.2%).

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Fund Composition

Industry Exposure

VNQ vs. RSP - Industry Exposure

VNQRSP
Technology0.0%14.73%
Industrials0.0%14.62%
Energy0.0%3.9%
Communication Services0.0%4.31%
Utilities0.0%5.58%
Healthcare0.0%13.69%
Consumer Defensive0.0%6.86%
Real Estate100.0%5.84%
Financial Services0.0%13.43%
Consumer Cyclical0.0%13.01%
Basic Materials0.0%4.04%

The Vanguard Real Estate Index Fund ETF Shares (VNQ) has the most exposure to the Real Estate sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

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

VNQ is 94.16% more exposed to the Real Estate sector than RSP (100.0% vs 5.84%). VNQ’s exposure to Technology and Industrials stocks is 14.73% lower and 14.62% lower respectively (0.0% vs. 14.73% and 0.0% vs. 14.62%). In total, Consumer Cyclical, Financial Services, and Consumer Defensive also make up 33.30% less of the fund’s holdings compared to RSP (0.00% vs. 33.30%).

Holdings

VNQ - Holdings

VNQ HoldingsWeight
Vanguard Real Estate II Index11.62%
American Tower Corp7.24%
Prologis Inc5.33%
Crown Castle International Corp5.01%
Equinix Inc4.3%
Public Storage2.85%
Simon Property Group Inc2.52%
Digital Realty Trust Inc2.49%
SBA Communications Corp2.1%
Welltower Inc2.09%

VNQ’s Top Holdings are Vanguard Real Estate II Index, American Tower Corp, Prologis Inc, Crown Castle International Corp, and Equinix Inc at 11.62%, 7.24%, 5.33%, 5.01%, and 4.3%.

Public Storage (2.85%), Simon Property Group Inc (2.52%), and Digital Realty Trust Inc (2.49%) have a slightly smaller but still significant weight. SBA Communications Corp and Welltower Inc are also represented in the VNQ’s holdings at 2.1% and 2.09%.

RSP - Holdings

RSP HoldingsWeight
Chipotle Mexican Grill Inc0.27%
Nike Inc Class B0.25%
MSCI Inc0.25%
Monolithic Power Systems Inc0.25%
Enphase Energy Inc0.25%
Advanced Micro Devices Inc0.25%
ResMed Inc0.24%
PerkinElmer Inc0.24%
IDEXX Laboratories Inc0.24%
Danaher Corp0.24%

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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Risk Analysis

VNQRSP
Mean Return0.891.19
R-squared44.494.47
Std. Deviation16.1315.36
Alpha2.47-2.45
Beta0.761.1
Sharpe Ratio0.620.89
Treynor Ratio11.912.12

The Vanguard Real Estate Index Fund ETF Shares (VNQ) has a R-squared of 44.4 with a Mean Return of 0.89 and a Treynor Ratio of 11.9. Its Standard Deviation is 16.13 while VNQ’s Sharpe Ratio is 0.62. Furthermore, the fund has a Beta of 0.76 and a Alpha of 2.47.

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

VNQ’s Mean Return is 0.30 points lower than that of RSP and its R-squared is 50.07 points lower. With a Standard Deviation of 16.13, VNQ is slightly more volatile than RSP. The Alpha and Beta of VNQ are 4.92 points higher and 0.34 points lower than RSP’s Alpha and Beta.

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Performance

Annual Returns

VNQ vs. RSP - Annual Returns

YearVNQRSP
2020-4.72%12.75%
201928.91%28.94%
2018-5.95%-7.77%
20174.95%18.52%
20168.53%14.34%
20152.37%-2.57%
201430.29%14.02%
20132.42%35.6%
201217.67%17.04%
20118.62%-0.5%
201028.44%21.3%

VNQ had its best year in 2014 with an annual return of 30.29%. VNQ’s worst year over the past decade yielded -5.95% and occurred in 2018. In most years the Vanguard Real Estate Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 4.95%, 8.53%, and 8.62% 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

VNQ vs. RSP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VNQ$10,000$29,50611.05%
RSP$10,000$38,66413.79%

A $10,000 investment in VNQ would have resulted in a final balance of $29,506. This is a profit of $19,506 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.05%.

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%.

VNQ’s CAGR is 2.74 percentage points lower than that of RSP and as a result, would have yielded $9,158 less on a $10,000 investment. Thus, VNQ performed worse than RSP by 2.74% annually.


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