The iShares Core S&P Small-Cap ETF (IJR) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between IJR and XLE? And which fund is better?
The expense ratio of IJR is 0.06 percentage points lower than XLE’s (0.06% vs. 0.12%). IJR also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IJR has provided higher returns than XLE over the past ten years.
In this article, we’ll compare IJR vs. XLE. We’ll look at performance and annual returns, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss IJR’s and XLE’s industry exposure, risk metrics, and fund composition and examine how these affect their overall returns.
Summary
| IJR | XLE | |
| Name | iShares Core S&P Small-Cap ETF | Energy Select Sector SPDR Fund |
| Category | Small Blend | Equity Energy |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 68.64B | 25.55B |
| Avg. Return | 13.97% | 1.28% |
| Div. Yield | 0.96% | 3.92% |
| 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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.
IJR’s dividend yield is 2.96% lower than that of XLE (0.96% vs. 3.92%). Also, IJR yielded on average 12.69% more per year over the past decade (13.97% vs. 1.28%). The expense ratio of IJR is 0.06 percentage points lower than XLE’s (0.06% vs. 0.12%).
Fund Composition
Industry Exposure
| IJR | XLE | |
| Technology | 14.32% | 0.0% |
| Industrials | 17.31% | 0.0% |
| Energy | 4.0% | 100.0% |
| Communication Services | 2.59% | 0.0% |
| 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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.
XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (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 XLE (10.60% vs. 100.00%).
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%.
| XLE Holdings | Weight |
| Exxon Mobil Corp | 23.7% |
| Chevron Corp | 20.03% |
| ConocoPhillips | 4.64% |
| EOG Resources Inc | 4.46% |
| Schlumberger Ltd | 4.43% |
| Marathon Petroleum Corp | 4.17% |
| Pioneer Natural Resources Co | 4.08% |
| Phillips 66 | 4.07% |
| Kinder Morgan Inc Class P | 3.85% |
| Williams Companies Inc | 3.5% |
XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.
Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.
Risk Analysis
| IJR | XLE | |
| Mean Return | 1.21 | 0.32 |
| R-squared | 76.03 | 61.84 |
| Std. Deviation | 18.68 | 27.52 |
| Alpha | -3.7 | -11.98 |
| Beta | 1.2 | 1.54 |
| Sharpe Ratio | 0.74 | 0.12 |
| Treynor Ratio | 10.77 | -0.4 |
The iShares Core S&P Small-Cap ETF (IJR) has a Standard Deviation of 18.68 with a Mean Return of 1.21 and a Sharpe Ratio of 0.74. Its Alpha is -3.7 while IJR’s R-squared is 76.03. Furthermore, the fund has a Beta of 1.2 and a Treynor Ratio of 10.77.
The Energy Select Sector SPDR Fund (XLE) has a Mean Return of 0.32 with a Alpha of -11.98 and a R-squared of 61.84. Its Beta is 1.54 while XLE’s Sharpe Ratio is 0.12. Furthermore, the fund has a Standard Deviation of 27.52 and a Treynor Ratio of -0.4.
IJR’s Mean Return is 0.89 points higher than that of XLE and its R-squared is 14.19 points higher. With a Standard Deviation of 18.68, IJR is slightly less volatile than XLE. The Alpha and Beta of IJR are 8.28 points higher and 0.34 points lower than XLE’s Alpha and Beta.
Performance
Annual Returns
| Year | IJR | XLE |
| 2020 | 11.24% | -32.56% |
| 2019 | 22.79% | 11.87% |
| 2018 | -8.43% | -18.1% |
| 2017 | 13.2% | -1.01% |
| 2016 | 26.49% | 27.95% |
| 2015 | -2.0% | -21.47% |
| 2014 | 5.67% | -8.61% |
| 2013 | 41.36% | 26.16% |
| 2012 | 16.28% | 5.17% |
| 2011 | 0.9% | 2.98% |
| 2010 | 26.14% | 21.7% |
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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IJR | $10,000 | $38,800 | 13.97% |
| XLE | $10,000 | $9,339 | 1.28% |
A $10,000 investment in IJR would have resulted in a final balance of $38,800. This is a profit of $28,800 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.97%.
With a $10,000 investment in XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.
IJR’s CAGR is 12.69 percentage points higher than that of XLE and as a result, would have yielded $29,461 more on a $10,000 investment. Thus, IJR outperformed XLE by 12.69% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
