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RSP vs SPY: Which S&P 500 ETF Is Better Long Term?

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We Compare RSP vs SPY:

Invesco S&P 500® Equal Weight ETF (RSP) vs SPDR S&P 500 ETF Trust (SPY)

Choosing between two great investment options like RSP vs SPY can be difficult.  They are both great funds and popular among investors.

In this article, we compare these ETFs with respect to performance, holdings, minimum investment, and cost.

RSP vs SPY Graphic

 

RSP vs SPY

The primary difference between RSP and SPY is the brokerage that issues the fund.  RSP is an Invesco fund, while SPY is a fund from State Street Global Advisors Trust Company.

RSP is a Invesco fund

SPY is a State Street Global Advisors Trust Company fund

Another significant difference is the index these funds track.

RSP tracks the Equal-Weighted Index of the S&P 500

SPY also tracks the S&P 500. However, it’s not a weighted index, and ETF can invest in any of the proportions depending on their will.

Being dependent on the weighted index, RSP is highly diversified and the top ten securities are only 2.58%. On the contrary, SPY is somewhat concentrated and the top ten securities constitute 38.40% of the total investment.

Both funds are incredibly popular with long-term investors.

RSP

  • Fund Inception: 2003
  • Tracks the S&P 500 Equally Weighted Index
  • Expense Ratio: 0.20%
  • Invesco ETF
  • No Minimum Investment
  • Top 10 Holdings: 2.5%
  • Number Of Stocks: 506

SPY

  • Fund Inception: 1993
  • Tracks the S&P 500 Index
  • Expense Ratio: 0.09%
  • State Street Fund
  • Number Of Stocks: 506
  • Top 10 Holdings: 28%
  • Yield 1.2%
  • Similar ETF (VOO)

Both RSP and SPY have low expense ratios; however, SPY’s expense ratio is lower than RSP.

RSP expense ratio is 0.20%

SPY expense ratio is 0.09%

Lastly, SPY and RSP are exchange-traded funds (ETFs); therefore, they trade intraday until the markets close.

 

RSP vs SPY Performance

RSP and SPY have had similar performance returns over the last 10 years.  The difference in performance returns is only 0.70% annually over 10 years.

RSP vs SPY Performance

As you can see, the long-term performance for RSP and SPY is similar.

Trend analysis from a performance perspective helps understand how ETFs have performed in the past. Although, it’s true that past performance may not be reflected in the future.

However, it helps to understand the return generating capacity of the ETF.

For instance, some ETFs may be exposed to higher risk, leading to a higher return. On the contrary, some ETFs presume lower risk and remain highly diversified.

Let’s compare RSP and SPY with the visuals.

RSP vs SPY Performance Chart

Based on the given number, there is not much difference in performance.

Monthly numbers suggest that the return range falls between 4% and 4.66%.

Similarly, a quarterly loss does not significantly deviate from each other. Likewise, annual, five-year, and ten years performance has been in line with each other.

So, there is not much deviation; it’s due to the fact that both of these ETFs are dependent on the S&P-500 index.

Although RSP is an equal-weighted index and investment of the SPY is one-third concentrated in the top ten securities.

It’s equally important to note that the volatility of the S&P 500 is comparatively less than NASDAQ-100.

For instance, the quarterly and YTD loss potential of RSP and SPY indexes is lower than NASDAQ-100 ETFs. However, the same goes for profit.

So, from a performance perspective, we conclude that RSP and SPY do not much deviate from each other. Further, both of these ETFs are somewhat more stable/less volatile than NASDAQ-100.

Similarities between RSP and SPY

  • Both track the S&P 500 index
  • Number Of Holdings
  • Rated as ”AA” by MSCI ESG Ratings
  • Both ETFs Have Lower Volatility

 

RSP vs SPY Holdings

First, holdings for RSP and SPY amount to 506 and 507 respectively. Both of these companies are the same.

However, there is a difference in terms of investing proportion.

For instance, RSP is highly diversified; the proportion of the investment in the top ten holdings ranges from 0.24% to 0.3%. So, the total top ten holding amounts to 2.58% total.

On the contrary, SPY is a little more concentrated.

For instance, Apple, Microsoft, and Amazon constitute 6%, 5%, and 3%. Similarly, the top ten holdings make up 28% in total. Therefore, it’s comparatively more concentrated.

Here is RSP vs SPY holdings side by side:

RSP vs SPY Holdings

The top 10 holdings for RSP make up 2.5% of its portfolio while SPY’s top 10 holdings make up 28%.

This means the performance of a few stocks like Apple, Microsoft, and Amazon will have a big impact on the overall performance of SPY.

 

RSP vs SPY Overlap

There is an overlap between RSP and SPY that includes 503 stocks.  All the holdings in RSP are in SPY.  The difference is in the overlap by weight.

Here are RSP and SPY holdings overlap:

RSP vs SPY Holdings Overlap

This overlap means RSP includes the majority of holdings in SPY.

Overlap By Weight

RSP has more diversification compared to SPY.

 

RSP vs SPY Expense Ratio

The difference in expense ratio between RSP and SPY is only 0.11%.  Invesco’s RSP has an expense ratio of 0.20%, while SPY has an expense ratio of 0.09%.

A possible reason for the higher expense ratio of RSP includes the higher credibility of Invesco which enables them to charge a higher price. The company is well known for managing market king ETFs like QQQ.

Regardless, expense ratios make a difference for investors.

Example:

Assuming you start with an initial investment of $100,000 and contribute $10,000 each year over the 30 years.

You will have $70,000 less in your account because of the extra 0.11% expense ratio.

This difference for a long-term investor could be considered significant.

Winner: SPY with the lowest expense ratio of 0.09%

 

What Is The Difference Between RSP and SPY?

The main difference between RSP  and SPY is the brokerage that issues the fund.  For example, Invesco issued RSP, while State Street Global Advisors Trust Company issues SPY.

They also differ in how they track their index.

RSP tracks the S&P 500 Index (Equally Weighted).  SPY tracks the S&P 500 Index.

RSP vs SPY Comparison Chart

Lastly, RSP and SPY have different expense ratios.  SPY has a lower expense ratio of 0.09%.  RSP has an expense ratio of 0.20%.

 

RSP Description

  • Fund Inception: 2003
  • Tracks the S&P 500 Equally Weighted Index
  • Expense Ratio: 0.20%
  • Invesco ETF
  • No Minimum Investment
  • Top 10 Holdings: 2%
  • Number Of Stocks: 506

Invesco S&P 500® Equal Weight ETF (RSP) launched in 2003 and tracks an equal-weighted index of S&P 500 companies.  Simply put, RSP takes all the stocks in the S&P 500 and weights them equally.

This equal weight gives smaller companies a larger representation in the ETF.  As a result, RSP has a higher beta compared to other S&P 500 ETFs.

Invesco’s RSP has an expense ratio of 0.20%.

 

RSP Performance

Invesco S&P 500® Equal Weight ETF (RSP) is popular for so many reasons, of which consistent returns are a significant part.  It has performed well with over 13% annual returns over the last 10 years.

RSP Performance Chart

Its risk level is similar to that of the S&P 500.

RSP Performance

 

RSP Holdings

Invesco’s RSP is largely made up of Nielsen, EPAM Systems, Twitter, Lamb Weston, and American Airlines and provides exposure to over 500 stocks.

Here are the top 10 holdings for RSP:

RSP Holdings

Major sectors in the index include:

  • Technology
  • Healthcare
  • Consumer Services
  • Financials
  • Industrials

The top 10 holdings make up 2.5% of its total net assets.

 

No Minimum Investment

RSP and SPY are exchange-traded funds (ETFs), so there is no minimum investment.

The only requirement is the need to purchase at least one full share.

Usually, fractional shares are unavailable for ETFs unless you use M1 Finance. ***(Get $50 When You Use This Link)***

M1 Finance allows you to purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.  You won’t have to keep your money sitting idle until you have enough to purchase a full share.

This is especially beneficial when buying SPY because of its high share price.

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital Retirement Fee Analyzer

Personal Capital’s free tools allow you to easily find which of your investments has high fees so that you can switch them to low-cost options.  (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

 

SPY Description

  • Fund Inception: 1993
  • Tracks the S&P 500 Index
  • Expense Ratio: 0.09%
  • Number Of Stocks: 506
  • Top 10 Holdings: 28%
  • Yield 1.2%

SPDR S&P 500 ETF Trust (SPY) tracks the Standard & Poor’s 500 Index (S&P 500).

SPY was created in 1993, making it the first exchange-traded fund listed in the U.S.  SPY is also one of the most popular ETFs funds available.

It currently has an expense ratio of 0.09% and offers exposure to over 500 stocks.

The SPDR S&P 500 ETF Trust (SPY) is considered a large blend ETF and tracks a market-cap-weighted index of large and mid-cap stocks.

The S&P Committee selects these stocks.

 

SPY Performance

Over the last 10 years, SPY has had an average return of 15% annually.  This is almost the same as the performance of the S&P 500 over the same time frame.

The goal of SPY is to mirror the results of the S&P 500 index.

Here is the growth of $10,000 over 10 years with SPY:

SPY Performance Chart

 

SPY Holdings

The top 10 holdings for SPY make up 28% of its total assets.

These are the top 10 holdings for SPY:

SPY Top 10 Holdings

SPDR S&P 500 ETF Trust (SPY) is largely made up of Apple, Microsoft, Amazon, Google, and Tesla.

However, it also provides exposure to over 500 other stocks.

 

Which Is Better RSP vs SPY?

RSP and SPY are both excellent investments depending on your investment goals.  They both have a history of outstanding performance returns and are low-cost ETFs.

The answer to which ETF is better depends on your investing goals and the brokerage you prefer to use.

Here are some advantages of both of them:

RSP Advantages:

  • Invesco Brokerage
  • Increased Diversification

SPY Advantages:

  • State Street Advisors Brokerage
  • Lower Expense Ratio

I believe both RSP and SPY can be great investment options, and both can get you to Financial Independence Retire Early (FIRE).

They both have super-low expense ratios (0.20% vs 0.09%).  Therefore, either option is a great investment for financial independence.

After keeping fees to a minimum, you can work on increasing your savings rate and prioritizing your investments.

Then, you will be well on your way to Financial Independence and Early Retirement!

Related Posts:

 

My Winner: SPY

SPY and RSP can be great long-term investments.  This is because they both have a similar return on investment.

However, commissions and fees can add up over the long term.

So, for those reasons, I prefer SPY.

SPY is lower cost and provides more liquidity compared to RSP.

SPY has higher liquidity with over $374 billion in total net assets compared to $34 billion with RSP.

If you already have an Invesco account, it makes sense to go with RSP for the ability to purchase the ETF commission-free.

You can also use M1 Finance.  (Use this link for a $50 Bonus)

You should consider your investment goals when deciding between the two funds.

 


Disclaimer
This post may have affiliate links, which means I may receive commissions if you choose to purchase through links I provide (at no extra cost to you). Thank you for supporting the work I put into this site!

This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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