More retail investors steered toward IVV, capitalizing on the iShares ETF’s smaller 0.07% expense ratio, compared to SPY’s 0.095% expense ratio. RSP comes with a more expensive 0.40% expense ratio, but that is attributed to the equal-weight methodology.
Unlike SPY and IVV, RSP equally weights the 500 components of the S&P 500. As a result, smaller companies have a greater influence on the fund’s performance.
“In addition, there may be a slight improvement in return resulting from the strategy’s need to periodically rebalance by selling recent winners and buying recent losers, which results in a forced buy low/sell high approach.,” Morningstar‘s Michael Rawson said in an overview of RSP.
For more information on the S&P 500, visit our S&P 500 category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own SPY.