VOO Is a Great Choice for Most, but I Like RSP ETF Better
It has minimal expenses and has historically been a great way to build wealth over long periods.
The S&P 500 has become a little top-heavy, so I prefer an equal-weight approach.
10 stocks we like better than Invesco S&P 500 Equal Weight ETF ›
The Vanguard S&P 500 ETF (NYSEMKT: VOO), also known by its ticker symbol VOO, is one of the most popular funds in the world. Including Vanguard's mutual fund version of the same index fund, investors have $1.4 trillion in assets invested in it.
As the name suggests, this is an index fund that tracks the benchmark S&P 500 (SNPINDEX: ^GSPC) over time. In other words, if the S&P 500 produces a 20% total return for investors over the next two years, this ETF should do the same, net of fees.
Speaking of fees, as a Vanguard ETF, the investment expenses of this index fund are extremely low. It has an expense ratio of just 0.03%, which means that for every $1,000 in assets, your annual investment cost will be just $0.30, which will be reflected in the fund's performance over time.
The Vanguard S&P 500 ETF is generally thought of as an excellent "core" investment for a stock portfolio. And in full disclosure, I own shares of it in my own retirement portfolio. But if I were to put new money to work today, I may choose to go in a slightly different direction and buy shares of a similar ETF that has one big difference.
To be clear, the Vanguard S&P 500 ETF is a great index fund. If you're simply looking for a low-cost way to match the stock market's performance over time, it could be an excellent addition to your portfolio.
My biggest issue with investing in the S&P 500 is that it has become rather top-heavy in recent years. With the emergence of trillion-dollar tech companies, the S&P 500 is weighted so that well over one-third of its performance is derived from the 10 largest components.
In a nutshell, an S&P 500 index fund has increasingly become a bet on the largest few dozen U.S. companies, and has become less of a broad, diversified way of getting stock market exposure.
If I were putting new money to work today, I would take a closer look at the Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP). It invests in the same 500 companies you'll find in the portfolio of the Vanguard S&P 500 ETF, but with one key difference.
Instead of allocating assets based on the size of each component, it invests an equal amount in all 500 companies. Of course, there are day-to-day fluctuations, but there's about 0.2% of the fund's assets invested at any given time. This means that smaller components of the S&P 500 like Dollar General carry the same weight as megacaps like Microsoft.
The equal-weight fund does have a somewhat higher 0.20% expense ratio, but this is still on the lower end for a unique ETF.
As mentioned, there's absolutely nothing wrong with a traditional S&P 500 index fund. But if you're not too much of a fan of having your investment's performance largely dependent on just a few companies, this equal-weight counterpart could be worth a closer look.
Before you buy stock in Invesco S&P 500 Equal Weight ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Invesco S&P 500 Equal Weight ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!*
Now, it's worth noting Stock Advisor's total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join .
See the 10 stocks »
*Stock Advisor returns as of June 9, 2025
Matt Frankel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Microsoft and Vanguard S&P 500 ETF. 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.
VOO Is a Great Choice for Most, but I Like RSP ETF Better was originally published by The Motley Fool
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
13 minutes ago
- Business Insider
Wall Street Is Cautious on CoreWeave (CRWV) Stock Ahead of Q2 Earnings
Artificial intelligence (AI)-powered cloud computing company CoreWeave (CRWV) is scheduled to announce its second-quarter results on August 12. Despite the pullback over the past month, CRWV stock has jumped 224% from its initial public offering (IPO) price of $40 due to the optimism about AI infrastructure companies. While CoreWeave delivered impressive revenue growth of 420% in Q1 2025, several analysts are cautious due to many reasons, including the stock's steep valuation, high debt levels, and significant dependence on its major customer, Microsoft (MSFT). Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Moreover, the expiration of CRWV's IPO lockup is approaching in late September, following which insiders and early investors are allowed to sell the stock. Meanwhile, Wall Street expects a loss per share of $0.23 on revenue of $1.08 billion for the second quarter. Investors will pay attention to management's commentary on the demand backdrop and update on the Core Scientific (CORZ) acquisition, given that major CORZ shareholders are demanding better terms. Analysts Are Cautious on CRWV Stock While CoreWeave recently earned a rating upgrade to Buy from Citi analyst Tyler Radke, most analysts remain cautious on the stock. Heading into the Q2 results, Morgan Stanley analyst Keith Weiss increased the price target for CoreWeave stock to $91 from $58, while reiterating a Hold rating. The 5-star analyst noted the strong first-quarter results, which reflected solid execution and accelerating customer demand. However, Weiss cautioned that the upcoming lockup expiration could weigh on CRWV stock in the near term. Likewise, Goldman Sachs analyst Kash Rangan raised his price target for CoreWeave stock to $120 from $61 and reaffirmed a Hold rating. The 4-star analyst expects CoreWeave to report revenue growth of 173% for Q2 2025, compared to the consensus estimate of 174%, capital expenditure of $3.2 billion, and operating margin of 14% compared to the consensus forecast of 15%. Rangan noted that the infrastructure buildout is lasting longer than the market initially expected, with companies like Oracle (ORCL) and Microsoft continuing to invest aggressively. He also highlighted that CoreWeave continues to sign large customers and rapidly expand capacity. Despite these positives, Rangan cautioned that customer concentration risk remains significant, particularly after the signing of an additional $4 billion deal with ChatGPT-maker OpenAI. He also pointed out that depreciation continues to weigh down margins, and debt is expected to 'remain elevated for the foreseeable future.' Rangan awaits more evidence of revenue durability and a sustainable return on capex investments before turning positive on CRWV stock. What Is the Price Target for CoreWeave Stock? Overall, Wall Street is sidelined on CoreWeave stock, with a Hold consensus rating based on 13 Holds, six Buys, and two Sell recommendations. The average CRWV stock price target of $107.59 indicates about 17% downside risk.
Yahoo
an hour ago
- Yahoo
Jim Cramer delivers straight talk on tricky S&P 500 market
Jim Cramer delivers straight talk on tricky S&P 500 market originally appeared on TheStreet. Jim Cramer isn't sugarcoating that 2025 has been a tricky ride for investors in the S&P 500. A few AI-powered giants have been doing the bulk of the heavy lifting, while plenty of stocks are still stuck in neutral. However, you're not alone in watching the AI trade play out. In the most recent episode of CNBC's Mad Money, Cramer effectively breaks down the trade and what truly matters at this point. 💵💰💰💵 With AI giants charging ahead and small caps not moving, he's reminding investors to follow his old playbook. It's all about preparation and being aware of the game plan, instead of just running after every shiny stock in sight. Cramer's investing playbook on beating the S&P 500 At the core of Jim Cramer's special is his investing playbook, which he has effectively shaped through decades of booms, busts, and early missteps. Invest as soon as possible, even if money is tight. Reinvest dividends and don't put all your eggs in one basket. Invest because of a well-thought-out thesis, and stick to it. Buy what you know and understand. A big part of that involves getting in early. Time spent in the market always beats timing the market, and compounding only begins if you shared his story, explaining that he invested in a mutual fund while living in his car. Also, reinvesting dividends and diversification are perhaps the biggest wealth-building tools out there. He had to learn diversification the hard way, though, as an oil-stock wipeout taught him not to bet it all on one industry. Also, it's best to stick to your thesis. For example, if you invest in a stock for a quick flip, don't let it become a long-term investment because you're too stubborn to sell, or vice versa. For active traders, it's best to buy only when there's a clear catalyst, a well-researched exit, and a strong intuition. This essentially involves aligning portfolios with risk tolerance and goals—growth, income, or capital preservation. Cramer is also a big fan of the 'invest in what you know' mantra shared by legendary investors Peter Lynch and Warren Buffett. Some of his best calls started with personal experience, including a good meal at Bob Evans or a hiring tip about SPS Technologies. Cramer's stock picks double as investing lessons Jim Cramer's trip down memory lane in his latest Mad Money episode provided many market lessons for investors to learn from. Kimberly-Clark got the longest spotlight. He told a story about a Goldman Sachs client buying 1,000 shares as a long-term hold who ignored Cramer's advice to sell after an $8 stock doubled, reinforcing that the best move sometimes is to let winners run. Foot Locker, on the other hand, was a different story. Once a remarkably tempting dividend play, its dwindling cash flow led to a payout cut, highlighting the importance of avoiding a dividend trap. Those who stuck around too long paid a price. Momentum is part of the mix, too. Eli Lilly has been a top performer because its GLP-1 weight loss drug has tapped into a massive long-term trend. Similarly, Nvidia has rewarded shareholders handsomely because of AI demand, and it remains the poster child of the AI stock rally. More News: Veteran analyst spots unexpected star in Apple's earnings report Bank of America drops shocking price target on hot weight-loss stock post-earnings JPMorgan drops 3-word verdict on Amazon stock post-earnings Cramer also talked about early missteps, where losses in American Agronomics (orange growers) and Bobby Brooks (fashion) were effectively offset by a win in Bob Evans Farms after digging into its expansion plans. Cramer shares thoughts on this year's stock market The 2025 market has effectively been a two-act drama. This spring, a sharp 19% retreat in the S&P 500 was one of the worst early stretches in decades, leaving investors on edge. However, the tide has shifted with markets snapping back, erasing earlier losses, and reaching new all-time August 8, the Nasdaq is up roughly 11% year to date, and the S&P 500 is up 8.6%. The Dow has also climbed nearly 4%, while small caps in the Russell 2000 are mostly flat to slightly negative. From Cramer's perspective, the winners kept pushing ahead, and anyone who stayed with them came out on top compared to those waiting for a broad small-cap revival that never arrived. Market leadership has been mostly narrow, with a small cluster of mega-cap plays driving most gains. AI has been the defining market story. Stocks like Palantir and Super Micro have thrived on the explosive demand for AI-related infrastructure, proving the value of sticking to your thesis and being confident. Hence, investors following a Cramer-like approach have enjoyed relatively strong gains this year, despite the choppiness. The best results this year have come from letting winners run. Jim Cramer delivers straight talk on tricky S&P 500 market first appeared on TheStreet on Aug 9, 2025 This story was originally reported by TheStreet on Aug 9, 2025, where it first appeared. Sign in to access your portfolio
Chicago Tribune
2 hours ago
- Chicago Tribune
As electric bills rise, evidence mounts that data centers share blame
HARRISBURG, Pa. — Amid rising electric bills, states are under pressure to insulate regular household and business ratepayers from the costs of feeding Big Tech's energy-hungry data centers. It's not clear that any state has a solution and the actual effect of data centers on electricity bills is difficult to pin down. Some critics question whether states have the spine to take a hard line against tech behemoths like Microsoft, Google, Amazon and Meta. But more than a dozen states have begun taking steps as data centers drive a rapid build-out of power plants and transmission lines. That has meant pressuring the nation's biggest power grid operator to clamp down on price increases, studying the effect of data centers on electricity bills or pushing data center owners to pay a larger share of local transmission costs. Rising power bills are 'something legislators have been hearing a lot about. It's something we've been hearing a lot about. More people are speaking out at the public utility commission in the past year than I've ever seen before,' said Charlotte Shuff of the Oregon Citizens' Utility Board, a consumer advocacy group. 'There's a massive outcry.' Some ComEd customers seeing triple-digit bill increases as supply rate hike, heat wave convergeSome data centers could require more electricity than cities the size of Pittsburgh, Cleveland or New Orleans, and make huge factories look tiny by comparison. That's pushing policymakers to rethink a system that, historically, has spread transmission costs among classes of consumers that are proportional to electricity use. 'A lot of this infrastructure, billions of dollars of it, is being built just for a few customers and a few facilities and these happen to be the wealthiest companies in the world,' said Ari Peskoe, who directs the Electricity Law Initiative at Harvard University. 'I think some of the fundamental assumptions behind all this just kind of breaks down.' A fix, Peskoe said, is a 'can of worms' that pits ratepayer classes against one another. Some officials downplay the role of data centers in pushing up electric bills. Tricia Pridemore, who sits on Georgia's Public Service Commission and is president of the National Association of Regulatory Utility Commissioners, pointed to an already tightened electricity supply and increasing costs for power lines, utility poles, transformers and generators as utilities replace aging equipment or harden it against extreme weather. The data centers needed to accommodate the artificial intelligence boom are still in the regulatory planning stages, Pridemore said, and the Data Center Coalition, which represents Big Tech firms and data center developers, has said its members are committed to paying their fair share. But growing evidence suggests that the electricity bills of some Americans are rising to subsidize the massive energy needs of Big Tech as the U.S. competes in a race against China for artificial intelligence superiority. Data and analytics firm Wood Mackenzie published a report in recent weeks that suggested 20 proposed or effective specialized rates for data centers in 16 states it studied aren't nearly enough to cover the cost of a new natural gas power plant. In other words, unless utilities negotiate higher specialized rates, other ratepayer classes — residential, commercial and industrial — are likely paying for data center power needs. Meanwhile, Monitoring Analytics, the independent market watchdog for the mid-Atlantic grid, produced research in June showing that 70% — or $9.3 billion — of last year's increased electricity cost was the result of data center demand. ComEd CEO seeks rules to prevent AI from boosting energy billsLast year, five governors led by Pennsylvania's Josh Shapiro began pushing back against power prices set by the mid-Atlantic grid operator, PJM Interconnection, after that amount spiked nearly sevenfold. They warned of customers 'paying billions more than is necessary.' PJM has yet to propose ways to guarantee that data centers pay their freight, but Monitoring Analytics is floating the idea that data centers should be required to procure their own power. In a filing last month, it said that would avoid a 'massive wealth transfer' from average people to tech companies. At least a dozen states are eyeing ways to make data centers pay higher local transmission costs. In Oregon, a data center hot spot, lawmakers passed legislation in June ordering state utility regulators to develop new — presumably higher — power rates for data centers. The Oregon Citizens' Utility Board says there is clear evidence that costs to serve data centers are being spread across all customers — at a time when some electric bills there are up 50% over the past four years and utilities are disconnecting more people than ever. New Jersey's governor signed legislation last month commissioning state utility regulators to study whether ratepayers are being hit with 'unreasonable rate increases' to connect data centers and to develop a specialized rate to charge data centers. In some other states, like Texas and Utah, governors and lawmakers are trying to avoid a supply-and-demand crisis that leaves ratepayers on the hook — or in the dark. ComEd closes $10M customer relief fund after 70,000 applicationsIn Indiana, state utility regulators approved a settlement between Indiana Michigan Power Co., Amazon, Google, Microsoft and consumer advocates that set parameters for data center payments for service. Kerwin Olsen, of the Citizens Action Council of Indiana, a consumer advocacy group, signed the settlement and called it a 'pretty good deal' that contained more consumer protections than what state lawmakers passed. But, he said, state law doesn't force large power users like data centers to publicly reveal their electric usage, so pinning down whether they're paying their fair share of transmission costs 'will be a challenge.' In a March report, the Environmental and Energy Law Program at Harvard University questioned the motivation of utilities and regulators to shield ratepayers from footing the cost of electricity for data centers. Both utilities and states have incentives to attract big customers like data centers, it said. To do it, utilities — which must get their rates approved by regulators — can offer 'special deals to favored customers' like a data center and effectively shift the costs of those discounts to regular ratepayers, the authors wrote. Many state laws can shield disclosure of those rates, they said. In Pennsylvania, an emerging data center hot spot, the state utility commission is drafting a model rate structure for utilities to consider adopting. An overarching goal is to get data center developers to put their money where their mouth is. 'We're talking about real transmission upgrades, potentially hundreds of millions of dollars,' commission chairman Stephen DeFrank said. 'And that's what you don't want the ratepayer to get stuck paying for.'
