IAU vs. XLC: What’s The Difference?

The iShares Gold Trust (IAU) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. IAU is a iShares N/A fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between IAU and XLC? And which fund is better?

The expense ratio of IAU is 0.13 percentage points higher than XLC’s (0.25% vs. 0.12%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than XLC over the past 2 years.

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

Summary

IAU XLC
Name iShares Gold Trust Communication Services Select Sector SPDR Fund
Category N/A Communications
Issuer iShares SPDR State Street Global Advisors
AUM 28.61B 14.09B
Avg. Return 6.03% 29.04%
Div. Yield 0.0% 0.62%
Expense Ratio 0.25% 0.12%

The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

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%.

IAU’s dividend yield is 0.62% lower than that of XLC (0.0% vs. 0.62%). Also, IAU yielded on average 23.00% less per year over the past decade (6.03% vs. 29.04%). The expense ratio of IAU is 0.13 percentage points higher than XLC’s (0.25% vs. 0.12%).

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Fund Composition

Industry Exposure

IAU vs. XLC - Industry Exposure

IAU XLC
Technology 0.0% 0.0%
Industrials 0.0% 0.0%
Energy 0.0% 0.0%
Communication Services 0.0% 100.0%
Utilities 0.0% 0.0%
Healthcare 0.0% 0.0%
Consumer Defensive 0.0% 0.0%
Real Estate 0.0% 0.0%
Financial Services 0.0% 0.0%
Consumer Cyclical 0.0% 0.0%
Basic Materials 0.0% 0.0%

The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy 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.

IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

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%.

IAU is 0.00% less exposed to the Technology sector than XLC (0.0% vs 0.0%). IAU’s exposure to Industrials and Energy stocks is 0.00% lower and 0.00% lower respectively (0.0% vs. 0.0% and 0.0% vs. 0.0%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 0.00% less of the fund’s holdings compared to XLC (0.00% vs. 0.00%).

Holdings

IAU - Holdings

IAU Holdings Weight
Gold 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

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%.

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Risk Analysis

IAU XLC
Mean Return 0.23 0
R-squared 16.03 0
Std. Deviation 16.97 0
Alpha 4.16 0
Beta 0.48 0
Sharpe Ratio 0.13 0
Treynor Ratio 1.5 0

The iShares Gold Trust (IAU) has a Treynor Ratio of 1.5 with a R-squared of 16.03 and a Mean Return of 0.23. Its Beta is 0.48 while IAU’s Alpha is 4.16. Furthermore, the fund has a Standard Deviation of 16.97 and a Sharpe Ratio of 0.13.

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

IAU’s Mean Return is 0.23 points higher than that of XLC and its R-squared is 16.03 points higher. With a Standard Deviation of 16.97, IAU is slightly more volatile than XLC. The Alpha and Beta of IAU are 4.16 points higher and 0.48 points higher than XLC’s Alpha and Beta.

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Performance

Annual Returns

IAU vs. XLC - Annual Returns

Year IAU XLC
2020 23.86% 26.85%
2019 18.54% 31.22%
2018 -1.39% 0.0%
2017 11.58% 0.0%
2016 8.85% 0.0%
2015 -11.65% 0.0%
2014 -0.44% 0.0%
2013 -27.96% 0.0%
2012 8.37% 0.0%
2011 8.66% 0.0%
2010 27.93% 0.0%

IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% 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

IAU vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $14,682 6.03%
XLC $10,000 $16,645 29.04%

A $10,000 investment in IAU would have resulted in a final balance of $14,682. This is a profit of $4,682 over 2 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

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%.

IAU’s CAGR is 23.00 percentage points lower than that of XLC and as a result, would have yielded $1,963 less on a $10,000 investment. Thus, IAU performed worse than XLC by 23.00% annually.


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