XLF vs. RSP: What’s The Difference?

The Financial Select Sector SPDR Fund (XLF) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and RSP is a Invesco Large Blend fund. So, what’s the difference between XLF and RSP? And which fund is better?

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

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

Summary

XLF RSP
Name Financial Select Sector SPDR Fund Invesco S&P 500 Equal Weight ETF
Category Financial Large Blend
Issuer SPDR State Street Global Advisors Invesco
AUM 40.81B 28.62B
Avg. Return 12.17% 13.79%
Div. Yield 1.57% 1.31%
Expense Ratio 0.12% 0.2%

The Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% 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%.

XLF’s dividend yield is 0.26% higher than that of RSP (1.57% vs. 1.31%). Also, XLF yielded on average 1.62% less per year over the past decade (12.17% vs. 13.79%). The expense ratio of XLF is 0.08 percentage points lower than RSP’s (0.12% vs. 0.2%).

Fund Composition

Industry Exposure

XLF vs. RSP - Industry Exposure

XLF RSP
Technology 0.0% 14.73%
Industrials 0.0% 14.62%
Energy 0.0% 3.9%
Communication Services 0.0% 4.31%
Utilities 0.0% 5.58%
Healthcare 0.0% 13.69%
Consumer Defensive 0.0% 6.86%
Real Estate 0.0% 5.84%
Financial Services 100.0% 13.43%
Consumer Cyclical 0.0% 13.01%
Basic Materials 0.0% 4.04%

The Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% 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.

XLF’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%.

XLF is 86.57% more exposed to the Financial Services sector than RSP (100.0% vs 13.43%). XLF’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, Real Estate, and Consumer Defensive also make up 25.71% less of the fund’s holdings compared to RSP (0.00% vs. 25.71%).

Holdings

XLF - Holdings

XLF Holdings Weight
Berkshire Hathaway Inc Class B 12.83%
JPMorgan Chase & Co 11.47%
Bank of America Corp 7.57%
Wells Fargo & Co 4.56%
Citigroup Inc 3.56%
Morgan Stanley 3.32%
Goldman Sachs Group Inc 3.15%
BlackRock Inc 3.02%
Charles Schwab Corp 2.66%
American Express Co 2.62%

XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.

Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.

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%.

Risk Analysis

XLF RSP
Mean Return 1.21 1.19
R-squared 73.26 94.47
Std. Deviation 18.86 15.36
Alpha 2.63 -2.45
Beta 1.15 1.1
Sharpe Ratio 0.74 0.89
Treynor Ratio 11.25 12.12

The Financial Select Sector SPDR Fund (XLF) has a R-squared of 73.26 with a Sharpe Ratio of 0.74 and a Beta of 1.15. Its Mean Return is 1.21 while XLF’s Standard Deviation is 18.86. Furthermore, the fund has a Alpha of 2.63 and a Treynor Ratio of 11.25.

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

XLF’s Mean Return is 0.02 points higher than that of RSP and its R-squared is 21.21 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than RSP. The Alpha and Beta of XLF are 5.08 points higher and 0.05 points higher than RSP’s Alpha and Beta.

Performance

Annual Returns

XLF vs. RSP - Annual Returns

Year XLF RSP
2020 -1.68% 12.75%
2019 31.88% 28.94%
2018 -13.09% -7.77%
2017 22.03% 18.52%
2016 22.55% 14.34%
2015 -1.6% -2.57%
2014 15.02% 14.02%
2013 35.37% 35.6%
2012 28.53% 17.04%
2011 -17.16% -0.5%
2010 11.97% 21.3%

XLF had its best year in 2013 with an annual return of 35.37%. XLF’s worst year over the past decade yielded -17.16% and occurred in 2011. In most years the Financial Select Sector SPDR Fund provided moderate returns such as in 2010, 2014, and 2017 where annual returns amounted to 11.97%, 15.02%, and 22.03% 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

XLF vs. RSP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLF $10,000 $30,782 12.17%
RSP $10,000 $38,664 13.79%

A $10,000 investment in XLF would have resulted in a final balance of $30,782. This is a profit of $20,782 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.17%.

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%.

XLF’s CAGR is 1.62 percentage points lower than that of RSP and as a result, would have yielded $7,882 less on a $10,000 investment. Thus, XLF performed worse than RSP by 1.62% annually.


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