The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. VWO is a Vanguard Diversified Emerging Mkts fund and RSP is a Invesco Large Blend fund. So, what’s the difference between VWO and RSP? And which fund is better?
The expense ratio of VWO is 0.10 percentage points lower than RSP’s (0.1% vs. 0.2%). VWO also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VWO has provided lower returns than RSP over the past ten years.
In this article, we’ll compare VWO vs. RSP. We’ll look at portfolio growth and fund composition, as well as at their industry exposure and holdings. Moreover, I’ll also discuss VWO’s and RSP’s annual returns, risk metrics, and performance and examine how these affect their overall returns.
Summary
| VWO | RSP | |
| Name | Vanguard FTSE Emerging Markets Index Fund ETF Shares | Invesco S&P 500 Equal Weight ETF |
| Category | Diversified Emerging Mkts | Large Blend |
| Issuer | Vanguard | Invesco |
| AUM | 117.28B | 28.62B |
| Avg. Return | 5.79% | 13.79% |
| Div. Yield | 1.98% | 1.31% |
| Expense Ratio | 0.1% | 0.2% |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) is a Diversified Emerging Mkts fund that is issued by Vanguard. It currently has 117.28B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 1.98% 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%.
VWO’s dividend yield is 0.67% higher than that of RSP (1.98% vs. 1.31%). Also, VWO yielded on average 8.00% less per year over the past decade (5.79% vs. 13.79%). The expense ratio of VWO is 0.10 percentage points lower than RSP’s (0.1% vs. 0.2%).
Fund Composition
Industry Exposure
| VWO | RSP | |
| Technology | 17.06% | 14.73% |
| Industrials | 5.95% | 14.62% |
| Energy | 5.48% | 3.9% |
| Communication Services | 11.41% | 4.31% |
| Utilities | 2.55% | 5.58% |
| Healthcare | 5.33% | 13.69% |
| Consumer Defensive | 5.87% | 6.86% |
| Real Estate | 3.13% | 5.84% |
| Financial Services | 18.15% | 13.43% |
| Consumer Cyclical | 16.1% | 13.01% |
| Basic Materials | 8.98% | 4.04% |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has the most exposure to the Financial Services sector at 18.15%. This is followed by Technology and Consumer Cyclical at 17.06% and 16.1% respectively. Real Estate (3.13%), Healthcare (5.33%), and Energy (5.48%) only make up 13.94% of the fund’s total assets.
VWO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.87%, 5.95%, 8.98%, 11.41%, and 16.1%.
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%.
VWO is 4.72% more exposed to the Financial Services sector than RSP (18.15% vs 13.43%). VWO’s exposure to Technology and Consumer Cyclical stocks is 2.33% higher and 3.09% higher respectively (17.06% vs. 14.73% and 16.1% vs. 13.01%). In total, Real Estate, Healthcare, and Energy also make up 9.49% less of the fund’s holdings compared to RSP (13.94% vs. 23.43%).
Holdings
| VWO Holdings | Weight |
| Tencent Holdings Ltd | 5.29% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.73% |
| Taiwan Semiconductor Manufacturing Co Ltd | 4.58% |
| Meituan | 1.88% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 1.7% |
| Reliance Industries Ltd Shs Dematerialised | 1.06% |
| Naspers Ltd Class N | 1.01% |
| Vale SA | 0.92% |
| Infosys Ltd | 0.91% |
| China Construction Bank Corp Class H | 0.84% |
VWO’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Taiwan Semiconductor Manufacturing Co Ltd, Meituan, and Taiwan Semiconductor Manufacturing Co Ltd ADR at 5.29%, 4.73%, 4.58%, 1.88%, and 1.7%.
Reliance Industries Ltd Shs Dematerialised (1.06%), Naspers Ltd Class N (1.01%), and Vale SA (0.92%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the VWO’s holdings at 0.91% and 0.84%.
| 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
| VWO | RSP | |
| Mean Return | 0.45 | 1.19 |
| R-squared | 81.69 | 94.47 |
| Std. Deviation | 17.64 | 15.36 |
| Alpha | -1.36 | -2.45 |
| Beta | 1.06 | 1.1 |
| Sharpe Ratio | 0.27 | 0.89 |
| Treynor Ratio | 3.14 | 12.12 |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a Beta of 1.06 with a R-squared of 81.69 and a Sharpe Ratio of 0.27. Its Alpha is -1.36 while VWO’s Standard Deviation is 17.64. Furthermore, the fund has a Mean Return of 0.45 and a Treynor Ratio of 3.14.
The Invesco S&P 500 Equal Weight ETF (RSP) has a R-squared of 94.47 with a Treynor Ratio of 12.12 and a Alpha of -2.45. Its Beta is 1.1 while RSP’s Mean Return is 1.19. Furthermore, the fund has a Sharpe Ratio of 0.89 and a Standard Deviation of 15.36.
VWO’s Mean Return is 0.74 points lower than that of RSP and its R-squared is 12.78 points lower. With a Standard Deviation of 17.64, VWO is slightly more volatile than RSP. The Alpha and Beta of VWO are 1.09 points higher and 0.04 points lower than RSP’s Alpha and Beta.
Performance
Annual Returns
| Year | VWO | RSP |
| 2020 | 15.32% | 12.75% |
| 2019 | 20.4% | 28.94% |
| 2018 | -14.57% | -7.77% |
| 2017 | 31.38% | 18.52% |
| 2016 | 11.75% | 14.34% |
| 2015 | -15.35% | -2.57% |
| 2014 | 0.6% | 14.02% |
| 2013 | -5.0% | 35.6% |
| 2012 | 18.84% | 17.04% |
| 2011 | -18.68% | -0.5% |
| 2010 | 18.99% | 21.3% |
VWO had its best year in 2017 with an annual return of 31.38%. VWO’s worst year over the past decade yielded -18.68% and occurred in 2011. In most years the Vanguard FTSE Emerging Markets Index Fund ETF Shares provided moderate returns such as in 2014, 2016, and 2020 where annual returns amounted to 0.6%, 11.75%, and 15.32% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VWO | $10,000 | $16,200 | 5.79% |
| RSP | $10,000 | $38,664 | 13.79% |
A $10,000 investment in VWO would have resulted in a final balance of $16,200. This is a profit of $6,200 over 11 years and amounts to a compound annual growth rate (CAGR) of 5.79%.
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%.
VWO’s CAGR is 8.00 percentage points lower than that of RSP and as a result, would have yielded $22,464 less on a $10,000 investment. Thus, VWO performed worse than RSP by 8.00% annually.
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