VOO vs. RSP: Which S&P 500 ETF Is Better?
Key Points
The Vanguard S&P 500 ETF (VOO) is a market-cap-weighted version of the index and has $1 trillion in assets under management.
The Invesco S&P 500 Equal Weight ETF (RSP) invests in the same stocks but has a very different sector composition.
Tech earnings growth is expected to drive the economy for at least the next two years, making VOO the better choice for added exposure.
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FactSet's recent preview expects tech sector earnings growth of 44% for full-year 2026, roughly double that of the 22% growth forecast for the S&P 500. Goldman Sachs' 2027 earnings forecast currently calls for an additional 13% earnings growth in 2027, but it also notes that half of that is likely to come from artificial intelligence (AI) infrastructure beneficiaries.
In short, tech is going to continue driving the economy and the financial markets for the foreseeable future. If valuations remain reasonable, tech overweights could produce further outperformance.
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Of the two major ways to invest in the S&P 500 -- the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP) -- the one with the bigger tech allocation looks like the better bet.
The Vanguard S&P 500 ETF, which is market-cap-weighted, has a 35% tech allocation compared to just 19% for the equal-weight ETF. Also consider that the Invesco S&P 500 Equal Weight ETF rebalances quarterly. That means the current higher-than-average tech allocation it has, driven by the sector's big rally in the second quarter, is very likely about to drop.
As long as tech earnings growth is strong, I'd choose the Vanguard S&P 500 ETF.
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FactSet Research Systems, Goldman Sachs Group, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
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