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It is important to understand the key difference in RSP vs. SPY. SPY holds the same stocks but does it with a weighting according to each stock’s overall market cap. This key difference has resulted in drastic differences in terms of returns for the two ETFs. In this video, I explain what is going on between RSP vs. SPY to help make sense of the widening divergence between these two ETFs.Video Length: 00:06:28Invesco provides a good understanding of RSP:
RSP tracks the S&P 500 Equal Weight Index, which consists of the same companies within the market cap-weighted S&P 500 Index but equally weights them (each company has the same weight of 0.20%). The underlying index and fund rebalance quarterly and reconstitute yearly.
Here’s the picture from Invesco in how it compares to the two ETFs and what you can expect in allocation with RSP vs SPY (though the chart below is SPX, but still very similar).
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