DIA vs. XLC: What’s The Difference?

The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. DIA is a SPDR State Street Global Advisors Large Value fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between DIA and XLC? And which fund is better?

The expense ratio of DIA is 0.04 percentage points higher than XLC’s (0.16% vs. 0.12%). DIA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, DIA has provided lower returns than XLC over the past ten years.

In this article, we’ll compare DIA vs. XLC. We’ll look at performance and holdings, as well as at their fund composition and annual returns. Moreover, I’ll also discuss DIA’s and XLC’s industry exposure, portfolio growth, and risk metrics and examine how these affect their overall returns.

Summary

DIA XLC
Name SPDR Dow Jones Industrial Average ETF Trust Communication Services Select Sector SPDR Fund
Category Large Value Communications
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 30.46B 14.09B
Avg. Return 13.35% 29.04%
Div. Yield 1.61% 0.62%
Expense Ratio 0.16% 0.12%

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

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%.

DIA’s dividend yield is 0.99% higher than that of XLC (1.61% vs. 0.62%). Also, DIA yielded on average 15.68% less per year over the past decade (13.35% vs. 29.04%). The expense ratio of DIA is 0.04 percentage points higher than XLC’s (0.16% vs. 0.12%).

Fund Composition

Industry Exposure

DIA vs. XLC - Industry Exposure

DIA XLC
Technology 17.32% 0.0%
Industrials 16.7% 0.0%
Energy 2.0% 0.0%
Communication Services 4.42% 100.0%
Utilities 0.0% 0.0%
Healthcare 17.92% 0.0%
Consumer Defensive 6.3% 0.0%
Real Estate 0.0% 0.0%
Financial Services 20.68% 0.0%
Consumer Cyclical 13.44% 0.0%
Basic Materials 1.21% 0.0%

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.

DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.

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%.

DIA is 20.68% more exposed to the Financial Services sector than XLC (20.68% vs 0.0%). DIA’s exposure to Healthcare and Technology stocks is 17.92% higher and 17.32% higher respectively (17.92% vs. 0.0% and 17.32% vs. 0.0%). In total, Utilities, Basic Materials, and Energy also make up 3.21% more of the fund’s holdings compared to XLC (3.21% vs. 0.00%).

Holdings

DIA - Holdings

DIA Holdings Weight
UnitedHealth Group Inc 7.63%
Goldman Sachs Group Inc 7.23%
The Home Depot Inc 6.07%
Microsoft Corp 5.16%
Salesforce.com Inc 4.65%
Amgen Inc 4.64%
Boeing Co 4.56%
Visa Inc Class A 4.45%
McDonald’s Corp 4.4%
Honeywell International Inc 4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

XLC - Holdings

XLC Holdings Weight
Facebook Inc A 23.75%
Alphabet Inc A 11.49%
Alphabet Inc Class C 11.16%
Netflix Inc 4.78%
Charter Communications Inc A 4.65%
Comcast Corp Class A 4.44%
T-Mobile US Inc 4.41%
The Walt Disney Co 4.39%
AT&T Inc 4.35%
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%.

Risk Analysis

DIA XLC
Mean Return 1.13 0
R-squared 93.31 0
Std. Deviation 13.68 0
Alpha -0.94 0
Beta 0.97 0
Sharpe Ratio 0.94 0
Treynor Ratio 13.07 0

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a R-squared of 93.31 with a Sharpe Ratio of 0.94 and a Treynor Ratio of 13.07. Its Alpha is -0.94 while DIA’s Standard Deviation is 13.68. Furthermore, the fund has a Beta of 0.97 and a Mean Return of 1.13.

The Communication Services Select Sector SPDR Fund (XLC) has a Standard Deviation of 0 with a Treynor Ratio of 0 and a Alpha of 0. Its Mean Return is 0 while XLC’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.

DIA’s Mean Return is 1.13 points higher than that of XLC and its R-squared is 93.31 points higher. With a Standard Deviation of 13.68, DIA is slightly more volatile than XLC. The Alpha and Beta of DIA are 0.94 points lower and 0.97 points higher than XLC’s Alpha and Beta.

Performance

Annual Returns

DIA vs. XLC - Annual Returns

Year DIA XLC
2020 9.63% 26.85%
2019 25.09% 31.22%
2018 -3.6% 0.0%
2017 27.97% 0.0%
2016 16.28% 0.0%
2015 0.1% 0.0%
2014 9.88% 0.0%
2013 29.41% 0.0%
2012 10.04% 0.0%
2011 8.21% 0.0%
2010 13.87% 0.0%

DIA had its best year in 2013 with an annual return of 29.41%. DIA’s worst year over the past decade yielded -3.6% and occurred in 2018. In most years the SPDR Dow Jones Industrial Average ETF Trust provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 9.88%, 10.04%, and 13.87% 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.

Portfolio Growth

DIA vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
DIA $10,000 $13,713 13.35%
XLC $10,000 $16,645 29.04%

A $10,000 investment in DIA would have resulted in a final balance of $13,713. This is a profit of $3,713 over 2 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

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%.

DIA’s CAGR is 15.68 percentage points lower than that of XLC and as a result, would have yielded $2,932 less on a $10,000 investment. Thus, DIA performed worse than XLC by 15.68% annually.


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