The iShares Core S&P Mid-Cap ETF (IJH) and the Financial Select Sector SPDR Fund (XLF) are both among the Top 100 ETFs. IJH is a iShares Mid-Cap Blend fund and XLF is a SPDR State Street Global Advisors Financial fund. So, what’s the difference between IJH and XLF? And which fund is better?
The expense ratio of IJH is 0.07 percentage points lower than XLF’s (0.05% vs. 0.12%). IJH also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IJH has provided higher returns than XLF over the past ten years.
In this article, we’ll compare IJH vs. XLF. We’ll look at risk metrics and industry exposure, as well as at their holdings and performance. Moreover, I’ll also discuss IJH’s and XLF’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.
|Name||iShares Core S&P Mid-Cap ETF||Financial Select Sector SPDR Fund|
|Issuer||iShares||SPDR State Street Global Advisors|
The iShares Core S&P Mid-Cap ETF (IJH) is a Mid-Cap Blend fund that is issued by iShares. It currently has 63.4B total assets under management and has yielded an average annual return of 13.50% over the past 10 years. The fund has a dividend yield of 1.07% with an expense ratio of 0.05%.
The Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.
IJH’s dividend yield is 0.50% lower than that of XLF (1.07% vs. 1.57%). Also, IJH yielded on average 1.33% more per year over the past decade (13.50% vs. 12.17%). The expense ratio of IJH is 0.07 percentage points lower than XLF’s (0.05% vs. 0.12%).
The iShares Core S&P Mid-Cap ETF (IJH) has the most exposure to the Industrials sector at 18.09%. This is followed by Consumer Cyclical and Financial Services at 14.91% and 14.85% respectively. Energy (2.5%), Utilities (2.9%), and Consumer Defensive (4.02%) only make up 9.42% of the fund’s total assets.
IJH’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Financial Services stocks at 5.42%, 10.04%, 10.89%, 14.81%, and 14.85%.
The Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLF’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
IJH is 18.09% more exposed to the Industrials sector than XLF (18.09% vs 0.0%). IJH’s exposure to Consumer Cyclical and Financial Services stocks is 14.91% higher and 85.15% lower respectively (14.91% vs. 0.0% and 14.85% vs. 100.0%). In total, Energy, Utilities, and Consumer Defensive also make up 9.42% more of the fund’s holdings compared to XLF (9.42% vs. 0.00%).
|Molina Healthcare Inc||0.68%|
|Fair Isaac Corp||0.64%|
|Camden Property Trust||0.62%|
|XPO Logistics Inc||0.6%|
|SolarEdge Technologies Inc||0.57%|
|FactSet Research Systems Inc||0.57%|
IJH’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and Camden Property Trust at 0.8%, 0.68%, 0.68%, 0.64%, and 0.62%.
XPO Logistics Inc (0.6%), Masimo Corp (0.59%), and SolarEdge Technologies Inc (0.57%) have a slightly smaller but still significant weight. FactSet Research Systems Inc and Graco Inc are also represented in the IJH’s holdings at 0.57% and 0.56%.
|Berkshire Hathaway Inc Class B||12.83%|
|JPMorgan Chase & Co||11.47%|
|Bank of America Corp||7.57%|
|Wells Fargo & Co||4.56%|
|Goldman Sachs Group Inc||3.15%|
|Charles Schwab Corp||2.66%|
|American Express Co||2.62%|
XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.
Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.
The iShares Core S&P Mid-Cap ETF (IJH) has a Sharpe Ratio of 0.77 with a R-squared of 86.39 and a Beta of 1.15. Its Mean Return is 1.13 while IJH’s Standard Deviation is 16.8. Furthermore, the fund has a Alpha of -4.01 and a Treynor Ratio of 10.55.
The Financial Select Sector SPDR Fund (XLF) has a R-squared of 73.26 with a Standard Deviation of 18.86 and a Mean Return of 1.21. Its Sharpe Ratio is 0.74 while XLF’s Beta is 1.15. Furthermore, the fund has a Alpha of 2.63 and a Treynor Ratio of 11.25.
IJH’s Mean Return is 0.08 points lower than that of XLF and its R-squared is 13.13 points higher. With a Standard Deviation of 16.8, IJH is slightly less volatile than XLF. The Alpha and Beta of IJH are 6.64 points lower and 0.00 points lower than XLF’s Alpha and Beta.
IJH had its best year in 2013 with an annual return of 33.4%. IJH’s worst year over the past decade yielded -11.14% and occurred in 2018. In most years the iShares Core S&P Mid-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 13.61%, 16.19%, and 17.76% respectively.
The year 2013 was the strongest year for XLF, returning 35.37% on an annual basis. The poorest year for XLF in the last ten years was 2011, with a yield of -17.16%. Most years the Financial Select Sector SPDR Fund has given investors modest returns, such as in 2010, 2014, and 2017, when gains were 11.97%, 15.02%, and 22.03% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IJH would have resulted in a final balance of $37,266. This is a profit of $27,266 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.50%.
With a $10,000 investment in XLF, the end total would have been $30,782. This equates to a $20,782 profit over 11 years and a compound annual growth rate (CAGR) of 12.17%.
IJH’s CAGR is 1.33 percentage points higher than that of XLF and as a result, would have yielded $6,484 more on a $10,000 investment. Thus, IJH outperformed XLF by 1.33% annually.
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