The Weight of Equivalents

by

The matter of allocation, as it concerns the iShares Core S&P 500 ETF (IVV 0.10%) and the Invesco S&P 500 Equal Weight ETF (RSP 0.26%), presents a peculiar geometry. Both instruments ostensibly offer access to the large-capitalization stratum of the American market, yet their approaches to this access diverge with a precision that borders on the unsettling. IVV, in its adherence to market capitalization weighting, mirrors the prevailing hierarchies. RSP, however, attempts a leveling—an equal footing for each constituent, as if to impose order upon a fundamentally chaotic system. The ensuing comparison, therefore, is not merely of returns and ratios, but of competing philosophies regarding the very nature of value.

It is a commonplace observation that both ETFs aim for diversification, a word that, upon closer inspection, reveals itself to be a rather desperate attempt to mitigate the inherent unpredictability of the market. IVV, in its passive acceptance of market forces, embodies a certain fatalism. It is as if the fund manager simply surrenders to the inevitable, allowing the largest entities to dictate the fund’s trajectory. RSP, conversely, suggests a faint, almost futile, rebellion against this established order, a stubborn insistence on treating each entity as equally significant, regardless of its actual influence. This, of course, does not alter the underlying reality, merely the method of its representation.

A Snapshot of the Procedure

Metric IVV RSP
Issuer iShares Invesco
Expense ratio 0.03% 0.20%
1-yr return (as of Jan. 9, 2026) 19.5% 14.1%
Dividend yield 1.2% 1.6%
Beta 1.00 0.99
AUM $758.5 billion $77.2 billion

Beta, a numerical attempt to quantify volatility relative to an arbitrary benchmark, is derived from five years of weekly data. The one-year return represents the total accumulation over the preceding twelve months, a period that, in the grand scheme of things, is barely a flicker of time.

IVV, predictably, maintains a lower cost structure, a bureaucratic efficiency that is almost alarming. RSP, in its insistence on equality, incurs a higher administrative burden, a price paid for its utopian aspirations. The marginally increased dividend yield offered by RSP is a curious anomaly, a small consolation prize for those who choose to participate in this elaborate exercise. It is a payment, one suspects, for the acceptance of a slightly less efficient process.

Performance and the Illusion of Control

Metric IVV RSP
Max drawdown (5 y) -24.53% -21.37%
Growth of $1,000 over 5 years $1,834 $1,506

The Composition of the Collective

RSP, in its adherence to the S&P 500 Equal Weight Index, holds approximately 505 companies, none of which exert undue influence over the fund’s trajectory. This approach, while theoretically sound, results in a sectoral distribution that deviates from the prevailing market norms. Technology, the dominant force in the current economic climate, accounts for a mere 16% of the fund’s assets. Top holdings – Sandisk Corp/DE (SNDK +1.07%), Norwegian Cruise Line Holdings Ltd (NCLH 3.78%), and Micron Technology Inc (MU +7.68%) – each represent a negligible fraction of the portfolio, a testament to the fund’s commitment to dispersal. The fund has been in operation for over 22 years, a considerable duration in a world characterized by relentless change.

By contrast, IVV replicates the S&P 500 in its standard, market-capitalization-weighted form. This means that Technology (43%) and the largest entities – Nvidia Corp (NVDA 0.29%), Apple Inc (AAPL 0.93%), and Microsoft Corp (MSFT +0.70%) – dominate the fund’s composition. This concentration, while historically rewarding during periods of technological exuberance, increases the fund’s dependence on a handful of companies, a vulnerability that cannot be ignored. It is a precarious balancing act, a reliance on forces beyond one’s control.

For further guidance on the intricacies of ETF investing, consult the accompanying documentation. It is a lengthy and largely unhelpful treatise, but it may provide a temporary distraction from the inherent absurdity of the situation.

Implications for the Observer

Both ETFs possess merits, though these are often obscured by the complexities of the underlying system. Investors should be aware of the subtle but significant differences that may influence their decision-making process. Both ETFs track the S&P 500, a benchmark that, despite its prominence, is ultimately an arbitrary construct. However, each fund does so in its own peculiar way. IVV replicates the index with a slavish adherence to market capitalization weighting, producing a total return that is, in theory, identical to the S&P 500. RSP, on the other hand, employs an equal-weighting formula that assigns equal importance to each constituent, regardless of its actual influence. Consequently, IVV gives greater weight to the dominant technological entities, while RSP distributes its resources more evenly across various sectors.

In addition to their weighting formulas, the funds differ in terms of expenses and yield. IVV boasts the lower fees, a negligible expense ratio that is almost unsettling. RSP’s expense ratio is higher, but still manageable. Income-seeking investors may be attracted to each fund’s dividend payments. RSP pays more, with a dividend yield of 1.6% versus 1.2% for IVV.

An investment fund that trades on a stock exchange, typically tracking an index.

Index fund:

A fund designed to replicate the performance of a specific market index.

Expense ratio:

Annual fund operating costs.

Dividend yield:

Annual dividends.

Market cap-weighted index:

Index weighting based on market value.

Equal weight index:

Index with equal weighting for each company.

Sector exposure:

Distribution across industries.

Beta:

Measure of price volatility.

Max drawdown:

Largest peak-to-trough decline.

Total return:

Performance including price changes and dividends.

AUM (Assets Under Management):

Total market value.

Portfolio concentration:

Degree of investment in a few holdings.

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2026-01-17 20:54