VTV vs. RSP: What’s The Difference?

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

The expense ratio of VTV is 0.16 percentage points lower than RSP’s (0.04% vs. 0.2%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided lower returns than RSP over the past ten years.

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

Summary

VTV RSP
Name Vanguard Value Index Fund ETF Shares Invesco S&P 500 Equal Weight ETF
Category Large Value Large Blend
Issuer Vanguard Invesco
AUM 125.77B 28.62B
Avg. Return 12.07% 13.79%
Div. Yield 2.15% 1.31%
Expense Ratio 0.04% 0.2%

The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.

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%.

VTV’s dividend yield is 0.84% higher than that of RSP (2.15% vs. 1.31%). Also, VTV yielded on average 1.71% less per year over the past decade (12.07% vs. 13.79%). The expense ratio of VTV is 0.16 percentage points lower than RSP’s (0.04% vs. 0.2%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VTV vs. RSP - Industry Exposure

VTV RSP
Technology 7.86% 14.73%
Industrials 12.61% 14.62%
Energy 5.59% 3.9%
Communication Services 5.49% 4.31%
Utilities 5.37% 5.58%
Healthcare 19.84% 13.69%
Consumer Defensive 10.72% 6.86%
Real Estate 3.01% 5.84%
Financial Services 22.81% 13.43%
Consumer Cyclical 3.79% 13.01%
Basic Materials 2.91% 4.04%

The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.

VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.

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%.

VTV is 9.38% more exposed to the Financial Services sector than RSP (22.81% vs 13.43%). VTV’s exposure to Healthcare and Industrials stocks is 6.15% higher and 2.01% lower respectively (19.84% vs. 13.69% and 12.61% vs. 14.62%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 12.26% less of the fund’s holdings compared to RSP (12.17% vs. 24.43%).

Holdings

VTV - Holdings

VTV Holdings Weight
Berkshire Hathaway Inc Class B 2.98%
JPMorgan Chase & Co 2.82%
Johnson & Johnson 2.6%
UnitedHealth Group Inc 2.27%
Procter & Gamble Co 1.98%
Bank of America Corp 1.91%
Exxon Mobil Corp 1.6%
Comcast Corp Class A 1.57%
Intel Corp 1.36%
Verizon Communications Inc 1.32%

VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.

Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VTV RSP
Mean Return 1.05 1.19
R-squared 92.61 94.47
Std. Deviation 13.78 15.36
Alpha -1.92 -2.45
Beta 0.98 1.1
Sharpe Ratio 0.87 0.89
Treynor Ratio 11.94 12.12

The Vanguard Value Index Fund ETF Shares (VTV) has a Treynor Ratio of 11.94 with a R-squared of 92.61 and a Sharpe Ratio of 0.87. Its Alpha is -1.92 while VTV’s Standard Deviation is 13.78. Furthermore, the fund has a Mean Return of 1.05 and a Beta of 0.98.

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

VTV’s Mean Return is 0.14 points lower than that of RSP and its R-squared is 1.86 points lower. With a Standard Deviation of 13.78, VTV is slightly less volatile than RSP. The Alpha and Beta of VTV are 0.53 points higher and 0.12 points lower than RSP’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Gemini - the simplest and cheapest broker I've found! Click here to read more (link to Gemini).

Performance

Annual Returns

VTV vs. RSP - Annual Returns

Year VTV RSP
2020 2.23% 12.75%
2019 25.85% 28.94%
2018 -5.39% -7.77%
2017 17.12% 18.52%
2016 16.88% 14.34%
2015 -0.89% -2.57%
2014 13.19% 14.02%
2013 33.03% 35.6%
2012 15.19% 17.04%
2011 1.16% -0.5%
2010 14.45% 21.3%

VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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

VTV vs. RSP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $33,163 12.07%
RSP $10,000 $38,664 13.79%

A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.

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%.

VTV’s CAGR is 1.71 percentage points lower than that of RSP and as a result, would have yielded $5,501 less on a $10,000 investment. Thus, VTV performed worse than RSP by 1.71% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply