The iShares Core S&P Small-Cap ETF (IJR) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between IJR and XLI? And which fund is better?
The expense ratio of IJR is 0.06 percentage points lower than XLI’s (0.06% vs. 0.12%). IJR also has a lower exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than XLI over the past ten years.
In this article, we’ll compare IJR vs. XLI. We’ll look at fund composition and annual returns, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss IJR’s and XLI’s holdings, portfolio growth, and performance and examine how these affect their overall returns.
Summary
| IJR | XLI | |
| Name | iShares Core S&P Small-Cap ETF | Industrial Select Sector SPDR Fund |
| Category | Small Blend | Industrials |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 68.64B | 19.33B |
| Avg. Return | 13.97% | 14.44% |
| Div. Yield | 0.96% | 1.25% |
| 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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.
IJR’s dividend yield is 0.29% lower than that of XLI (0.96% vs. 1.25%). Also, IJR yielded on average 0.48% less per year over the past decade (13.97% vs. 14.44%). The expense ratio of IJR is 0.06 percentage points lower than XLI’s (0.06% vs. 0.12%).
Fund Composition
Industry Exposure
| IJR | XLI | |
| Technology | 14.32% | 1.82% |
| Industrials | 17.31% | 97.49% |
| Energy | 4.0% | 0.0% |
| 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% | 0.69% |
| 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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.
IJR is 80.18% less exposed to the Industrials sector than XLI (17.31% vs 97.49%). IJR’s exposure to Financial Services and Technology stocks is 15.91% higher and 12.50% higher respectively (15.91% vs. 0.0% and 14.32% vs. 1.82%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.60% more of the fund’s holdings compared to XLI (10.60% vs. 0.00%).
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%.
| XLI Holdings | Weight |
| Honeywell International Inc | 4.9% |
| United Parcel Service Inc Class B | 4.84% |
| Union Pacific Corp | 4.7% |
| Boeing Co | 4.24% |
| Raytheon Technologies Corp | 4.16% |
| Caterpillar Inc | 3.84% |
| General Electric Co | 3.8% |
| 3M Co | 3.7% |
| Deere & Co | 3.54% |
| Lockheed Martin Corp | 2.98% |
XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.
Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.
Risk Analysis
| IJR | XLI | |
| Mean Return | 1.21 | 1.14 |
| R-squared | 76.03 | 78.97 |
| Std. Deviation | 18.68 | 17.13 |
| Alpha | -3.7 | 2.38 |
| Beta | 1.2 | 1.08 |
| Sharpe Ratio | 0.74 | 0.76 |
| Treynor Ratio | 10.77 | 11.34 |
The iShares Core S&P Small-Cap ETF (IJR) has a Treynor Ratio of 10.77 with a Alpha of -3.7 and a Mean Return of 1.21. Its Beta is 1.2 while IJR’s Sharpe Ratio is 0.74. Furthermore, the fund has a Standard Deviation of 18.68 and a R-squared of 76.03.
The Industrial Select Sector SPDR Fund (XLI) has a Alpha of 2.38 with a Sharpe Ratio of 0.76 and a Mean Return of 1.14. Its Standard Deviation is 17.13 while XLI’s R-squared is 78.97. Furthermore, the fund has a Treynor Ratio of 11.34 and a Beta of 1.08.
IJR’s Mean Return is 0.07 points higher than that of XLI and its R-squared is 2.94 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than XLI. The Alpha and Beta of IJR are 6.08 points lower and 0.12 points higher than XLI’s Alpha and Beta.
Performance
Annual Returns
| Year | IJR | XLI |
| 2020 | 11.24% | 11.0% |
| 2019 | 22.79% | 29.11% |
| 2018 | -8.43% | -13.1% |
| 2017 | 13.2% | 23.85% |
| 2016 | 26.49% | 19.93% |
| 2015 | -2.0% | -4.27% |
| 2014 | 5.67% | 10.44% |
| 2013 | 41.36% | 40.44% |
| 2012 | 16.28% | 14.86% |
| 2011 | 0.9% | -1.01% |
| 2010 | 26.14% | 27.62% |
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 2013 was the strongest year for XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IJR | $10,000 | $38,800 | 13.97% |
| XLI | $10,000 | $39,853 | 14.44% |
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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.
IJR’s CAGR is 0.48 percentage points lower than that of XLI and as a result, would have yielded $1,053 less on a $10,000 investment. Thus, IJR performed worse than XLI by 0.48% annually.
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