IAU vs. XLY: What’s The Difference?

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

The expense ratio of IAU is 0.13 percentage points higher than XLY’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 XLY over the past 11 years.

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

Summary

IAU XLY
Name iShares Gold Trust Consumer Discretionary Select Sector SPDR Fund
Category N/A Consumer Cyclical
Issuer iShares SPDR State Street Global Advisors
AUM 28.61B 20.21B
Avg. Return 6.03% 18.86%
Div. Yield 0.0% 0.63%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

IAU’s dividend yield is 0.63% lower than that of XLY (0.0% vs. 0.63%). Also, IAU yielded on average 12.83% less per year over the past decade (6.03% vs. 18.86%). The expense ratio of IAU is 0.13 percentage points higher than XLY’s (0.25% vs. 0.12%).

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Fund Composition

Industry Exposure

IAU vs. XLY - Industry Exposure

IAU XLY
Technology 0.0% 0.57%
Industrials 0.0% 0.0%
Energy 0.0% 0.0%
Communication Services 0.0% 0.0%
Utilities 0.0% 0.0%
Healthcare 0.0% 0.0%
Consumer Defensive 0.0% 5.34%
Real Estate 0.0% 0.0%
Financial Services 0.0% 0.0%
Consumer Cyclical 0.0% 94.1%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

IAU is 0.57% less exposed to the Technology sector than XLY (0.0% vs 0.57%). 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 94.10% less of the fund’s holdings compared to XLY (0.00% vs. 94.10%).

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%.

XLY - Holdings

XLY Holdings Weight
Amazon.com Inc 22.9%
Tesla Inc 13.5%
The Home Depot Inc 8.74%
McDonald’s Corp 4.5%
Nike Inc B 4.45%
Lowe’s Companies Inc 3.58%
Starbucks Corp 3.44%
Target Corp 3.12%
Booking Holdings Inc 2.35%
TJX Companies Inc 2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

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Risk Analysis

IAU XLY
Mean Return 0.23 1.47
R-squared 16.03 80.84
Std. Deviation 16.97 15.97
Alpha 4.16 6.96
Beta 0.48 1.02
Sharpe Ratio 0.13 1.06
Treynor Ratio 1.5 16.69

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

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Alpha of 6.96 with a Standard Deviation of 15.97 and a Treynor Ratio of 16.69. Its Mean Return is 1.47 while XLY’s Beta is 1.02. Furthermore, the fund has a R-squared of 80.84 and a Sharpe Ratio of 1.06.

IAU’s Mean Return is 1.24 points lower than that of XLY and its R-squared is 64.81 points lower. With a Standard Deviation of 16.97, IAU is slightly more volatile than XLY. The Alpha and Beta of IAU are 2.80 points lower and 0.54 points lower than XLY’s Alpha and Beta.

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Performance

Annual Returns

IAU vs. XLY - Annual Returns

Year IAU XLY
2020 23.86% 29.66%
2019 18.54% 28.43%
2018 -1.39% 1.66%
2017 11.58% 22.77%
2016 8.85% 5.87%
2015 -11.65% 9.93%
2014 -0.44% 9.49%
2013 -27.96% 42.74%
2012 8.37% 23.6%
2011 8.66% 5.98%
2010 27.93% 27.36%

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 2013 was the strongest year for XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.

Portfolio Growth

IAU vs. XLY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $16,786 6.03%
XLY $10,000 $63,066 18.86%

A $10,000 investment in IAU would have resulted in a final balance of $16,786. This is a profit of $6,786 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

With a $10,000 investment in XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.

IAU’s CAGR is 12.83 percentage points lower than that of XLY and as a result, would have yielded $46,280 less on a $10,000 investment. Thus, IAU performed worse than XLY by 12.83% annually.


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