The iShares MSCI EAFE Value ETF (EFV) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. EFV is a iShares Foreign Large Value fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between EFV and XLC? And which fund is better?
The expense ratio of EFV is 0.27 percentage points higher than XLC’s (0.39% vs. 0.12%). EFV also has a higher exposure to the financial services sector and a higher standard deviation. Overall, EFV has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare EFV vs. XLC. We’ll look at risk metrics and performance, as well as at their holdings and annual returns. Moreover, I’ll also discuss EFV’s and XLC’s industry exposure, fund composition, and portfolio growth and examine how these affect their overall returns.
Summary
| EFV | XLC | |
| Name | iShares MSCI EAFE Value ETF | Communication Services Select Sector SPDR Fund |
| Category | Foreign Large Value | Communications |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 14.37B | 14.09B |
| Avg. Return | 3.99% | 29.04% |
| Div. Yield | 2.94% | 0.62% |
| Expense Ratio | 0.39% | 0.12% |
The iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
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%.
EFV’s dividend yield is 2.32% higher than that of XLC (2.94% vs. 0.62%). Also, EFV yielded on average 25.04% less per year over the past decade (3.99% vs. 29.04%). The expense ratio of EFV is 0.27 percentage points higher than XLC’s (0.39% vs. 0.12%).
Fund Composition
Industry Exposure
| EFV | XLC | |
| Technology | 2.98% | 0.0% |
| Industrials | 11.6% | 0.0% |
| Energy | 6.6% | 0.0% |
| Communication Services | 6.46% | 100.0% |
| Utilities | 6.14% | 0.0% |
| Healthcare | 9.19% | 0.0% |
| Consumer Defensive | 6.82% | 0.0% |
| Real Estate | 5.06% | 0.0% |
| Financial Services | 26.55% | 0.0% |
| Consumer Cyclical | 9.0% | 0.0% |
| Basic Materials | 9.59% | 0.0% |
The iShares MSCI EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.
EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.
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%.
EFV is 26.55% more exposed to the Financial Services sector than XLC (26.55% vs 0.0%). EFV’s exposure to Industrials and Basic Materials stocks is 11.60% higher and 9.59% higher respectively (11.6% vs. 0.0% and 9.59% vs. 0.0%). In total, Real Estate, Utilities, and Communication Services also make up 82.34% less of the fund’s holdings compared to XLC (17.66% vs. 100.00%).
Holdings
| EFV Holdings | Weight |
| Novartis AG | 2.41% |
| Toyota Motor Corp | 2.21% |
| Commonwealth Bank of Australia | 1.59% |
| Siemens AG | 1.45% |
| Sanofi SA | 1.42% |
| HSBC Holdings PLC | 1.4% |
| TotalEnergies SE | 1.35% |
| Allianz SE | 1.23% |
| GlaxoSmithKline PLC | 1.18% |
| Rio Tinto PLC | 1.1% |
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
| 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
| EFV | XLC | |
| Mean Return | 0.42 | 0 |
| R-squared | 92.15 | 0 |
| Std. Deviation | 16.53 | 0 |
| Alpha | -1.77 | 0 |
| Beta | 1.05 | 0 |
| Sharpe Ratio | 0.26 | 0 |
| Treynor Ratio | 2.92 | 0 |
The iShares MSCI EAFE Value ETF (EFV) has a R-squared of 92.15 with a Mean Return of 0.42 and a Alpha of -1.77. Its Beta is 1.05 while EFV’s Sharpe Ratio is 0.26. Furthermore, the fund has a Treynor Ratio of 2.92 and a Standard Deviation of 16.53.
The Communication Services Select Sector SPDR Fund (XLC) has a Alpha of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Sharpe Ratio is 0 while XLC’s Standard Deviation is 0. Furthermore, the fund has a Mean Return of 0 and a R-squared of 0.
EFV’s Mean Return is 0.42 points higher than that of XLC and its R-squared is 92.15 points higher. With a Standard Deviation of 16.53, EFV is slightly more volatile than XLC. The Alpha and Beta of EFV are 1.77 points lower and 1.05 points higher than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | EFV | XLC |
| 2020 | -2.78% | 26.85% |
| 2019 | 15.97% | 31.22% |
| 2018 | -14.88% | 0.0% |
| 2017 | 21.22% | 0.0% |
| 2016 | 4.87% | 0.0% |
| 2015 | -5.89% | 0.0% |
| 2014 | -5.65% | 0.0% |
| 2013 | 22.61% | 0.0% |
| 2012 | 17.52% | 0.0% |
| 2011 | -12.24% | 0.0% |
| 2010 | 3.18% | 0.0% |
EFV had its best year in 2013 with an annual return of 22.61%. EFV’s worst year over the past decade yielded -14.88% and occurred in 2018. In most years the iShares MSCI EAFE Value ETF provided moderate returns such as in 2020, 2010, and 2016 where annual returns amounted to -2.78%, 3.18%, and 4.87% 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
| Fund | Initial Balance | Final Balance | CAGR |
| EFV | $10,000 | $11,274 | 3.99% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in EFV would have resulted in a final balance of $11,274. This is a profit of $1,274 over 2 years and amounts to a compound annual growth rate (CAGR) of 3.99%.
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%.
EFV’s CAGR is 25.04 percentage points lower than that of XLC and as a result, would have yielded $5,371 less on a $10,000 investment. Thus, EFV performed worse than XLC by 25.04% annually.
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