The iShares MSCI ACWI ETF (ACWI) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. ACWI is a iShares N/A fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between ACWI and XLC? And which fund is better?
The expense ratio of ACWI is 0.20 percentage points higher than XLC’s (0.32% vs. 0.12%). ACWI also has a higher exposure to the technology sector and a higher standard deviation. Overall, ACWI has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare ACWI vs. XLC. We’ll look at industry exposure and performance, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss ACWI’s and XLC’s portfolio growth, annual returns, and holdings and examine how these affect their overall returns.
|Name||iShares MSCI ACWI ETF||Communication Services Select Sector SPDR Fund|
|Issuer||iShares||SPDR State Street Global Advisors|
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
The Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
ACWI’s dividend yield is 0.77% higher than that of XLC (1.39% vs. 0.62%). Also, ACWI yielded on average 18.82% less per year over the past decade (10.21% vs. 29.04%). The expense ratio of ACWI is 0.20 percentage points higher than XLC’s (0.32% vs. 0.12%).
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The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
The Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
ACWI is 20.41% more exposed to the Technology sector than XLC (20.41% vs 0.0%). ACWI’s exposure to Financial Services and Consumer Cyclical stocks is 15.58% higher and 12.01% higher respectively (15.58% vs. 0.0% and 12.01% vs. 0.0%). In total, Real Estate, Energy, and Basic Materials also make up 10.96% more of the fund’s holdings compared to XLC (10.96% vs. 0.00%).
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|JPMorgan Chase & Co||0.71%|
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
|Facebook Inc A||23.75%|
|Alphabet Inc A||11.49%|
|Alphabet Inc Class C||11.16%|
|Charter Communications Inc A||4.65%|
|Comcast Corp Class A||4.44%|
|T-Mobile US Inc||4.41%|
|The Walt Disney Co||4.39%|
|Verizon Communications Inc||4.33%|
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
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The iShares MSCI ACWI ETF (ACWI) has a Treynor Ratio of 9.45 with a R-squared of 99.96 and a Mean Return of 0.89. Its Standard Deviation is 14.05 while ACWI’s Alpha is 0.15. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Beta of 1.
The Communication Services Select Sector SPDR Fund (XLC) has a Mean Return of 0 with a Sharpe Ratio of 0 and a Beta of 0. Its Treynor Ratio is 0 while XLC’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a R-squared of 0.
ACWI’s Mean Return is 0.89 points higher than that of XLC and its R-squared is 99.96 points higher. With a Standard Deviation of 14.05, ACWI is slightly more volatile than XLC. The Alpha and Beta of ACWI are 0.15 points higher and 1.00 points higher than XLC’s Alpha and Beta.
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ACWI had its best year in 2019 with an annual return of 26.7%. ACWI’s worst year over the past decade yielded -9.15% and occurred in 2018. In most years the iShares MSCI ACWI ETF provided moderate returns such as in 2016, 2010, and 2012 where annual returns amounted to 8.22%, 12.31%, and 15.99% respectively.
The year 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in ACWI would have resulted in a final balance of $14,745. This is a profit of $4,745 over 2 years and amounts to a compound annual growth rate (CAGR) of 10.21%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
ACWI’s CAGR is 18.82 percentage points lower than that of XLC and as a result, would have yielded $1,900 less on a $10,000 investment. Thus, ACWI performed worse than XLC by 18.82% annually.
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