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VUG vs. RSP: What’s The Difference?

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

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

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

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Summary

VUGRSP
NameVanguard Growth Index Fund ETF SharesInvesco S&P 500 Equal Weight ETF
CategoryLarge GrowthLarge Blend
IssuerVanguardInvesco
AUM165.53B28.62B
Avg. Return17.58%13.79%
Div. Yield0.57%1.31%
Expense Ratio0.04%0.2%

The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% 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%.

VUG’s dividend yield is 0.74% lower than that of RSP (0.57% vs. 1.31%). Also, VUG yielded on average 3.79% more per year over the past decade (17.58% vs. 13.79%). The expense ratio of VUG is 0.16 percentage points lower than RSP’s (0.04% vs. 0.2%).

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Fund Composition

Industry Exposure

VUG vs. RSP - Industry Exposure

VUGRSP
Technology39.05%14.73%
Industrials5.13%14.62%
Energy0.32%3.9%
Communication Services16.49%4.31%
Utilities0.0%5.58%
Healthcare8.09%13.69%
Consumer Defensive2.41%6.86%
Real Estate2.46%5.84%
Financial Services6.75%13.43%
Consumer Cyclical17.78%13.01%
Basic Materials1.52%4.04%

The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.

VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.

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%.

VUG is 24.32% more exposed to the Technology sector than RSP (39.05% vs 14.73%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 4.77% higher and 12.18% higher respectively (17.78% vs. 13.01% and 16.49% vs. 4.31%). In total, Energy, Basic Materials, and Consumer Defensive also make up 10.55% less of the fund’s holdings compared to RSP (4.25% vs. 14.80%).

Holdings

VUG - Holdings

VUG HoldingsWeight
Apple Inc10.13%
Microsoft Corp9.52%
Amazon.com Inc6.88%
Facebook Inc Class A3.89%
Alphabet Inc Class A3.43%
Alphabet Inc Class C3.22%
Tesla Inc2.44%
NVIDIA Corp2.21%
Visa Inc Class A1.78%
PayPal Holdings Inc1.6%

VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.

Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.

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

VUGRSP
Mean Return1.441.19
R-squared92.4894.47
Std. Deviation14.7615.36
Alpha1.81-2.45
Beta1.041.1
Sharpe Ratio1.130.89
Treynor Ratio16.1312.12

The Vanguard Growth Index Fund ETF Shares (VUG) has a Sharpe Ratio of 1.13 with a Treynor Ratio of 16.13 and a Mean Return of 1.44. Its R-squared is 92.48 while VUG’s Standard Deviation is 14.76. Furthermore, the fund has a Alpha of 1.81 and a Beta of 1.04.

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

VUG’s Mean Return is 0.25 points higher than that of RSP and its R-squared is 1.99 points lower. With a Standard Deviation of 14.76, VUG is slightly less volatile than RSP. The Alpha and Beta of VUG are 4.26 points higher and 0.06 points lower than RSP’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. RSP - Annual Returns

YearVUGRSP
202040.16%12.75%
201937.26%28.94%
2018-3.32%-7.77%
201727.8%18.52%
20166.13%14.34%
20153.32%-2.57%
201413.62%14.02%
201332.38%35.6%
201217.03%17.04%
20111.87%-0.5%
201017.11%21.3%

VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% 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

VUG vs. RSP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VUG$10,000$54,73517.58%
RSP$10,000$38,66413.79%

A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.

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%.

VUG’s CAGR is 3.79 percentage points higher than that of RSP and as a result, would have yielded $16,071 more on a $10,000 investment. Thus, VUG outperformed RSP by 3.79% annually.


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