XLK vs. RSP: What’s The Difference?

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

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

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

Summary

XLK RSP
Name Technology Select Sector SPDR Fund Invesco S&P 500 Equal Weight ETF
Category Technology Large Blend
Issuer SPDR State Street Global Advisors Invesco
AUM 42.3B 28.62B
Avg. Return 20.02% 13.79%
Div. Yield 0.73% 1.31%
Expense Ratio 0.12% 0.2%

The Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% 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%.

XLK’s dividend yield is 0.58% lower than that of RSP (0.73% vs. 1.31%). Also, XLK yielded on average 6.24% more per year over the past decade (20.02% vs. 13.79%). The expense ratio of XLK is 0.08 percentage points lower than RSP’s (0.12% vs. 0.2%).

Fund Composition

Industry Exposure

XLK vs. RSP - Industry Exposure

XLK RSP
Technology 87.54% 14.73%
Industrials 1.75% 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 10.71% 13.43%
Consumer Cyclical 0.0% 13.01%
Basic Materials 0.0% 4.04%

The Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 87.54%. This is followed by Financial Services and Industrials at 10.71% and 1.75% 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.

XLK’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 1.75%.

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%.

XLK is 72.81% more exposed to the Technology sector than RSP (87.54% vs 14.73%). XLK’s exposure to Financial Services and Industrials stocks is 2.72% lower and 12.87% lower respectively (10.71% vs. 13.43% and 1.75% 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

XLK - Holdings

XLK Holdings Weight
Apple Inc 21.45%
Microsoft Corp 20.37%
NVIDIA Corp 4.98%
Visa Inc Class A 3.95%
PayPal Holdings Inc 3.42%
Mastercard Inc A 3.19%
Adobe Inc 2.8%
Salesforce.com Inc 2.26%
Intel Corp 2.26%
Cisco Systems Inc 2.23%

XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.

Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.

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

XLK RSP
Mean Return 1.7 1.19
R-squared 73.56 94.47
Std. Deviation 15.58 15.36
Alpha 10.43 -2.45
Beta 0.95 1.1
Sharpe Ratio 1.27 0.89
Treynor Ratio 21.44 12.12

The Technology Select Sector SPDR Fund (XLK) has a Standard Deviation of 15.58 with a Treynor Ratio of 21.44 and a R-squared of 73.56. Its Alpha is 10.43 while XLK’s Beta is 0.95. Furthermore, the fund has a Mean Return of 1.7 and a Sharpe Ratio of 1.27.

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

XLK’s Mean Return is 0.51 points higher than that of RSP and its R-squared is 20.91 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than RSP. The Alpha and Beta of XLK are 12.88 points higher and 0.15 points lower than RSP’s Alpha and Beta.

Performance

Annual Returns

XLK vs. RSP - Annual Returns

Year XLK RSP
2020 43.67% 12.75%
2019 49.97% 28.94%
2018 -1.56% -7.77%
2017 34.27% 18.52%
2016 14.81% 14.34%
2015 5.62% -2.57%
2014 17.75% 14.02%
2013 25.98% 35.6%
2012 15.47% 17.04%
2011 2.69% -0.5%
2010 11.6% 21.3%

XLK had its best year in 2019 with an annual return of 49.97%. XLK’s worst year over the past decade yielded -1.56% and occurred in 2018. In most years the Technology Select Sector SPDR Fund provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 14.81%, 15.47%, and 17.75% 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

XLK vs. RSP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLK $10,000 $67,790 20.02%
RSP $10,000 $38,664 13.79%

A $10,000 investment in XLK would have resulted in a final balance of $67,790. This is a profit of $57,790 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.02%.

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%.

XLK’s CAGR is 6.24 percentage points higher than that of RSP and as a result, would have yielded $29,126 more on a $10,000 investment. Thus, XLK outperformed RSP by 6.24% annually.


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