RSP 2% # compare2curves@yahoo

Posted on by tiger40490 rendered_on [ Thu, 6 Mar 2025 ] 16:16 UTC
  • 1.5-2% CDY, better than SP500
  • https://www.marketwatch.com/story/long-term-investors-can-beat-the-sp-500-by-favoring-equal-weighted-etfs-2018-09-26
  • https://einvestingforbeginners.com/equal-weight-sp-500-etf-ansh/ (one person’s view) suggests the RSP is no worse than SPY , partly thanks to DYOC.
  • yahoo finance chart shows RSP beating SP500 even without dividend factored in ! I think this happens only over longer term.
  • .. After 20 experiments, I think the comparison chart lets us drag to select an arbitrary starting date. On that date the two curves start at the same 100% level, and start to drift apart. The chart then shows something like “RSP is currently 93% of starting level, whereas SP500 is 92% of starting level”
  • .. Is there a more reliable data source than Yahoo finance?
  • I think many of my passive investments [401k, AIA, TRBCX] already track the sp500, so I would prefer to diversify to an EWI fund.

— minor factors

  • momentum .. with equal-weight ETFs, there is “kind of an anti-momentum dynamic that is present because every quarter you’re kind of cutting back what has risen a lot and adding to what has lagged,” he added. “The trouble with market-cap-weighted [indices] longer term is you ride the momentum up. But there is no mechanism to kick those stocks out again. So, you ride them down.” That is why standard indexes may outperform equal-weight ETFs in the short run
  • historical (and future) performance .. I guess in a bull run lead by a few large stocks, EWI would underperform, as in the last few years.
  • concentration risk .. is better with the more diversified EWI. See https://www.investopedia.com/articles/exchangetradedfunds/08/market-equal-weight.asp . I think about 1/5 value of SP500 are the top 5 tech stocks which are badly correlated. Some investors embrace concentration on 5 tech superstars, because they don’t like holding laggards, but historically, the EWI has not really underperformed the highly concentrated SP500
  • volatility .. might be worse with the highly concentrated sp500, esp. during a sector crash. On the other hand, small-caps tend to be more volatile