RSP's equal-weight structure cost $27,800 vs VOO over a decade

The Invesco S&P 500 Equal Weight ETF erased $27,800 from a $10,000 investment versus a cap-weighted S&P 500 fund over a decade, with fees explaining only a fraction of the gap.

The Invesco S&P 500 Equal Weight ETF trailed its cap-weighted counterpart by 108 percentage points over a decade, with the fee gap explaining only a fraction of the underperformance.

"RSP is effectively an active bet on the average S&P 500 stock, not a passive index fund, charging premium fees for a structural underweight to its biggest winners," said Michael Williams, an investing analyst at 247wallst.com.

RSP returned 53.18% over five years and 206.76% over 10 years, compared with 86% and 314.79% for VOO. The 0.17% fee gap — 0.20% for RSP versus 0.03% for VOO — compounds to roughly $1,700 over a decade on a $10,000 stake, a fraction of the $27,800 total return gap. RSP also holds about 4.09% of net assets in cash equivalents, or roughly $3.59 billion, creating a structural drag in rising markets.

The analysis challenges a core premise of equal-weight investing — that diversification justifies the higher cost. With about $58 billion in assets, RSP remains one of the largest smart-beta ETFs, but its structural underweight to mega-cap stocks has cost investors consistently during a period when Apple, Microsoft and NVIDIA drove most S&P 500 gains.

The Fee Gap Is the Visible Cost

RSP's 0.20% expense ratio on a $10,000 position costs about $20 annually, versus $3 for VOO or iShares Core S&P 500 ETF at 0.03%. That gap compounds to roughly $1,700 over a decade but remains small relative to the $27,800 total return divergence. Over the past year, RSP gained 17.25% while VOO returned 22.04% — a nearly five-percentage-point gap on the same 500 companies. The direct cap-weighted alternatives, VOO and IVV, offer identical S&P 500 exposure at 0.03%, sidestepping RSP's fee stack entirely. For investors in taxable accounts, the fee differential is compounded by RSP's quarterly rebalancing, which generates capital gains distributions that cap-weighted funds largely avoid.

Cash and Rebalancing Create Hidden Drag

RSP held three short-term investment vehicles totaling $3.59 billion as of April 30, representing 4.09% of net assets. That cash sleeve lags equities in rising markets and is not captured in the expense ratio — a cost that compounds invisibly. The fund also resets its 508 positions toward equal weight every quarter, forcing it to sell winners and buy laggards across hundreds of names. That process generates turnover, transaction costs and taxable capital gains for investors in taxable accounts. Between rebalances, position sizes drift significantly from the equal-weight ideal: Intel sat at 0.378% of net assets while Alphabet held just 0.106%, according to the same filing. Investors are paying for equal-weight precision and getting a portfolio that drifts between quarterly resets.

When Equal Weight Works — and When It Doesn't

RSP has outperformed in 2026 so far, up 12.78% year to date versus VOO's 11.32%, as market leadership broadened beyond mega-cap technology. But six months of relative strength has not closed a five- or 10-year gap that exceeds 100 percentage points. The trade-off is structural: investors accept mega-cap concentration with cap-weighted funds, and if leadership rotates to the average stock, RSP could lead. The question for holders is whether they are buying RSP for a specific view on mega-cap valuation or because equal weight simply sounded safer than the index it tracks. Those are very different investments with the same ticker.

This article is for informational purposes only and does not constitute investment advice.