The iShares Core S&P Small-Cap ETF (IJR) and the Technology Select Sector SPDR Fund (XLK) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and XLK is a SPDR State Street Global Advisors Technology fund. So, what’s the difference between IJR and XLK? And which fund is better?
The expense ratio of IJR is 0.06 percentage points lower than XLK’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 XLK over the past ten years.
In this article, we’ll compare IJR vs. XLK. We’ll look at performance and annual returns, as well as at their holdings and industry exposure. Moreover, I’ll also discuss IJR’s and XLK’s fund composition, portfolio growth, and risk metrics and examine how these affect their overall returns.
|Name||iShares Core S&P Small-Cap ETF||Technology Select Sector SPDR Fund|
|Issuer||iShares||SPDR State Street Global Advisors|
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 Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% with an expense ratio of 0.12%.
IJR’s dividend yield is 0.23% higher than that of XLK (0.96% vs. 0.73%). Also, IJR yielded on average 6.06% less per year over the past decade (13.97% vs. 20.02%). The expense ratio of IJR is 0.06 percentage points lower than XLK’s (0.06% vs. 0.12%).
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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 Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 87.54%. This is followed by Financial Services and Industrials at 10.71% and 1.75% 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.
XLK’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 1.75%.
IJR is 15.56% more exposed to the Industrials sector than XLK (17.31% vs 1.75%). IJR’s exposure to Financial Services and Technology stocks is 5.20% higher and 73.22% lower respectively (15.91% vs. 10.71% and 14.32% vs. 87.54%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.60% more of the fund’s holdings compared to XLK (10.60% vs. 0.00%).
|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
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%.
|Visa Inc Class A||3.95%|
|PayPal Holdings Inc||3.42%|
|Mastercard Inc A||3.19%|
|Cisco Systems Inc||2.23%|
XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.
Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.
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The iShares Core S&P Small-Cap ETF (IJR) has a Mean Return of 1.21 with a Standard Deviation of 18.68 and a Treynor Ratio of 10.77. Its R-squared is 76.03 while IJR’s Alpha is -3.7. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Beta of 1.2.
The Technology Select Sector SPDR Fund (XLK) has a R-squared of 73.56 with a Mean Return of 1.7 and a Treynor Ratio of 21.44. Its Beta is 0.95 while XLK’s Sharpe Ratio is 1.27. Furthermore, the fund has a Standard Deviation of 15.58 and a Alpha of 10.43.
IJR’s Mean Return is 0.49 points lower than that of XLK and its R-squared is 2.47 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than XLK. The Alpha and Beta of IJR are 14.13 points lower and 0.25 points higher than XLK’s Alpha and Beta.
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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 XLK, returning 49.97% on an annual basis. The poorest year for XLK in the last ten years was 2018, with a yield of -1.56%. Most years the Technology Select Sector SPDR Fund has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 14.81%, 15.47%, and 17.75% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 XLK, the end total would have been $67,790. This equates to a $57,790 profit over 11 years and a compound annual growth rate (CAGR) of 20.02%.
IJR’s CAGR is 6.06 percentage points lower than that of XLK and as a result, would have yielded $28,990 less on a $10,000 investment. Thus, IJR performed worse than XLK by 6.06% annually.
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