Note that an equal-weighted index will tend be more volatile, have higher turnover (i.e. more trading costs and short-term tax effects) and be sensitive to value over momentum in comparison with a market-cap weighted index like the S&P 500. The former have outperformed the latter over the last decade (EDIT: no, it hasn’t. I was looking at a biased source.)
Morningstar shows VOO with a greater total return than RSP for past 5 years and since inception. I didn’t see past 10 years at a quick glance, but I imagine it’s the same.
No, it hasn’t. I had a bad source. Thank you.
It is probably easier to just buy RSP and then buy virtually any 'market' or tech etf/mutual fund to round up the top 10-20% weighting as you want it. The reason I say any will do is that there is little difference in the holdings of most of the etfs and funds.
Historical performance of RSP has always lagged behind SPX
ref: https://stockcharts.com/freecharts/perf.php?RSP,SPY
change the window size to whatever time horizon you want.
That’s the nice thing with the market cap weighted SP500 funds, no tax consequences from rebalancing.
But you could plug “RSP” into a tax-advantaged account.
Edit: You can owe taxes even if you don’t personally buy/sell.
As a fund shareholder, you could be on the hook for taxes on gains even if you haven't sold any of your shares.
https://investor.vanguard.com/investing/taxes/mutual-funds-e...
https://money.usnews.com/investing/investing-101/articles/et...
> Since mutual funds trade directly through the fund manager, the manager may need to sell shares of the fund's investments to generate cash needed to cover redemptions. This causes mutual funds to buy and sell within the fund more frequently than ETFs. And every time the trades generate net capital gains within the fund, it creates a taxable event for investors.
"Mutual funds are legally required to pay out capital gains to their shareholders each year," Jessee says. Even if you don't sell your shares, you may get a tax bill for gains incurred within the fund. This could happen even in a fund that's losing value.
If you've maxed out all your sheltered accounts, and are worried about dealing tax events in non-sheltered ones, that's a pretty good position to be in—financially speaking.
> Approximately 6 in 10 households in the United States own securities investments—typically through taxable accounts, IRAs or employer-sponsored retirement plans. However, this figure drops to a little over 3 in 10 if only taxable investments are considered. Households that own taxable accounts are more likely to be older, affluent, college educated and white relative to households with only retirement accounts or households without investment accounts.
* PDF: https://www.sec.gov/spotlight/fixed-income-advisory-committe...
The 3-in-10 would also have sheltered accounts:
> Importantly, most of these taxable investor households (89 percent) also own a retirement account like a 401(k) or IRA.
I stand by my statement: most people don't have to worry about tax events in mutual funds, and those that are in the situation have a 'good problem'.
I mean could you have imagined 10, 20 years ago that Disney would start to gobble up other companies like some weird Shoggoth monstrosity and multiply its stock value by 5-6 times?
Of course, they're panicking over that. Of course they're trying to find growth. But they can't find it yet.
The fact is, they own so many brands in other beverage categories already. They own 500 beverage brands.