RSP vs. IVV: Is RSP's Diversification or IVV's Lower Fees Better for Average Investors?

The iShares Core SP 500 ETF (NYSEMKT:IVV) and Invesco S&P 500 Equal Weight ETF (NYSEMKT:RSP) differ most in how they weight stocks, sector exposures, and cost, with IVV tracking the market cap-weighted S&P 500 and RSP giving every company an equal footing.

Both IVV and RSP aim to give investors diversified access to large U.S. companies, but their strategies diverge: IVV mirrors the market’s biggest players, while RSP levels the playing field. This comparison looks at cost, recent performance, risk, and what’s actually inside each ETF to help clarify which approach may appeal to different investing styles.

Snapshot (Cost & Size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

IVV remains much more affordable on fees, but RSP offers a slightly higher payout thanks to its greater dividend yield. That extra yield may appeal to income-focused investors willing to pay a higher expense ratio for a different sector mix.

Performance & Risk Comparison

What's Inside

RSP tracks the S&P 500 Equal Weight Index, holding about 505 companies with no single name dominating the fund. This approach pulls sector weights away from tech and toward areas like Industrials and Financial Services, with Technology accounting for just 16% of assets. Top holdings—such as Sandisk Corp/DE (NASDAQ:SNDK), Norwegian Cruise Line Holdings Ltd (NYSE:NCLH), and Micron Technology Inc (NASDAQ:MU)—each represent less than 0.3% of the portfolio, showing how diversified the exposure is. The fund has a long track record, with more than 22 years in operation.

By contrast, IVV replicates the S&P 500 in its standard market-cap weighting, which means Technology (43%) and major giants like Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT) dominate. This leads to higher concentration in the largest names, which has historically boosted returns during tech-led rallies but increases dependence on a handful of companies.

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What This Means For Investors

There's much to like about each of these ETFs, but investors should be aware of a few key differences that may help them determine which one might be right for them.

For starters, both ETFs track the S&P 500, arguably the most prominent stock market benchmark. However, each fund does so in its own way. IVV tracks the S&P 500 in the most standardized way -- replicating the index's market cap weighting, producing a total return identical to the S&P 500. RSP, on the other hand, uses an equal-weighting formula that gives equal weight to each of the S&P 500 components. Consequently, IVV gives greater weight to big tech stocks, while RSP is relatively underweight big tech, in favor of industrials and financials.

In addition to their weighting formulas, the funds also differ on expenses and yield. IVV boasts the lower fees, with a nearly non-existent expense ratio of only 0.03%. Meanwhile, RSP's expense ratio is higher, but still quite affordable, at 0.20%. Income-seeking investors may want to consider each fund's dividend payments. RSP pays more, with a dividend yield of 1.6% versus 1.2% for IVV.

To sum up, IVV offers lower fees, a higher concentration of big tech stocks, and delivered higher returns over the last five years. However, RSP provides a greater dividend yield and more diversification.

Glossary

ETF: An investment fund that trades on a stock exchange and typically tracks an index.
Index fund: A fund designed to replicate the performance of a specific market index, like the S&P 500.
Expense ratio: Annual fund operating costs expressed as a percentage of the assets you invest.
Dividend yield: Annual dividends paid by a fund or stock divided by its current share price.
Market cap-weighted index: Index where each company’s weight is based on its total market value.
Equal weight index: Index where each company is given the same weight, regardless of its size.
Sector exposure: How a fund’s holdings are distributed across different industries, such as Technology or Financials.
Beta: A measure of how much an investment’s price moves relative to a benchmark index.
Max drawdown: The largest peak-to-trough decline in an investment’s value over a specific period.
Total return: Investment performance including price changes plus all dividends and distributions, assuming they are reinvested.
AUM (Assets Under Management): The total market value of all assets managed by a fund.
Portfolio concentration: The degree to which a fund’s assets are invested in a small number of holdings or sectors.

Jake Lerch has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.