IJR vs. XLC: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between IJR and XLC? And which fund is better?

The expense ratio of IJR is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than XLC over the past ten years.

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

Summary

IJR XLC
Name iShares Core S&P Small-Cap ETF Communication Services Select Sector SPDR Fund
Category Small Blend Communications
Issuer iShares SPDR State Street Global Advisors
AUM 68.64B 14.09B
Avg. Return 13.97% 29.04%
Div. Yield 0.96% 0.62%
Expense Ratio 0.06% 0.12%

The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.

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%.

IJR’s dividend yield is 0.34% higher than that of XLC (0.96% vs. 0.62%). Also, IJR yielded on average 15.07% less per year over the past decade (13.97% vs. 29.04%). The expense ratio of IJR is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%).

Fund Composition

Industry Exposure

IJR vs. XLC - Industry Exposure

IJR XLC
Technology 14.32% 0.0%
Industrials 17.31% 0.0%
Energy 4.0% 0.0%
Communication Services 2.59% 100.0%
Utilities 1.8% 0.0%
Healthcare 11.55% 0.0%
Consumer Defensive 4.01% 0.0%
Real Estate 9.55% 0.0%
Financial Services 15.91% 0.0%
Consumer Cyclical 13.61% 0.0%
Basic Materials 5.34% 0.0%

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

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%.

IJR is 17.31% more exposed to the Industrials sector than XLC (17.31% vs 0.0%). IJR’s exposure to Financial Services and Technology stocks is 15.91% higher and 14.32% higher respectively (15.91% vs. 0.0% and 14.32% vs. 0.0%). In total, Communication Services, Energy, and Consumer Defensive also make up 89.40% less of the fund’s holdings compared to XLC (10.60% vs. 100.00%).

Holdings

IJR - Holdings

IJR Holdings Weight
BlackRock Cash Funds Treasury SL Agency 1.08%
GameStop Corp Class A 0.86%
Omnicell Inc 0.61%
Stamps.com Inc 0.58%
Saia Inc 0.57%
Power Integrations Inc 0.57%
Exponent Inc 0.54%
NeoGenomics Inc 0.53%
Chart Industries Inc 0.53%
Macy’s Inc 0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

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

IJR XLC
Mean Return 1.21 0
R-squared 76.03 0
Std. Deviation 18.68 0
Alpha -3.7 0
Beta 1.2 0
Sharpe Ratio 0.74 0
Treynor Ratio 10.77 0

The iShares Core S&P Small-Cap ETF (IJR) has a R-squared of 76.03 with a Mean Return of 1.21 and a Standard Deviation of 18.68. Its Sharpe Ratio is 0.74 while IJR’s Alpha is -3.7. Furthermore, the fund has a Treynor Ratio of 10.77 and a Beta of 1.2.

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

IJR’s Mean Return is 1.21 points higher than that of XLC and its R-squared is 76.03 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than XLC. The Alpha and Beta of IJR are 3.70 points lower and 1.20 points higher than XLC’s Alpha and Beta.

Performance

Annual Returns

IJR vs. XLC - Annual Returns

Year IJR XLC
2020 11.24% 26.85%
2019 22.79% 31.22%
2018 -8.43% 0.0%
2017 13.2% 0.0%
2016 26.49% 0.0%
2015 -2.0% 0.0%
2014 5.67% 0.0%
2013 41.36% 0.0%
2012 16.28% 0.0%
2011 0.9% 0.0%
2010 26.14% 0.0%

IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% 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

IJR vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $13,659 13.97%
XLC $10,000 $16,645 29.04%

A $10,000 investment in IJR would have resulted in a final balance of $13,659. This is a profit of $3,659 over 2 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

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%.

IJR’s CAGR is 15.07 percentage points lower than that of XLC and as a result, would have yielded $2,986 less on a $10,000 investment. Thus, IJR performed worse than XLC by 15.07% annually.


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