The iShares Core S&P Small-Cap ETF (IJR) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between IJR and XLV? And which fund is better?
The expense ratio of IJR is 0.06 percentage points lower than XLV’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 XLV over the past ten years.
In this article, we’ll compare IJR vs. XLV. We’ll look at industry exposure and annual returns, as well as at their risk metrics and holdings. Moreover, I’ll also discuss IJR’s and XLV’s portfolio growth, performance, and fund composition and examine how these affect their overall returns.
Summary
| IJR | XLV | |
| Name | iShares Core S&P Small-Cap ETF | Health Care Select Sector SPDR Fund |
| Category | Small Blend | Health |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 68.64B | 27.88B |
| Avg. Return | 13.97% | 15.02% |
| Div. Yield | 0.96% | 1.4% |
| 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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.
IJR’s dividend yield is 0.44% lower than that of XLV (0.96% vs. 1.4%). Also, IJR yielded on average 1.06% less per year over the past decade (13.97% vs. 15.02%). The expense ratio of IJR is 0.06 percentage points lower than XLV’s (0.06% vs. 0.12%).
Fund Composition
Industry Exposure
| IJR | XLV | |
| Technology | 14.32% | 0.0% |
| Industrials | 17.31% | 0.0% |
| Energy | 4.0% | 0.0% |
| Communication Services | 2.59% | 0.0% |
| Utilities | 1.8% | 0.0% |
| Healthcare | 11.55% | 100.0% |
| 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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.
XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, 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 XLV (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 10.60% more of the fund’s holdings compared to XLV (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%.
| XLV Holdings | Weight |
| Johnson & Johnson | 9.19% |
| UnitedHealth Group Inc | 8.01% |
| Pfizer Inc | 4.64% |
| Abbott Laboratories | 4.36% |
| AbbVie Inc | 4.21% |
| Thermo Fisher Scientific Inc | 4.2% |
| Merck & Co Inc | 4.17% |
| Eli Lilly and Co | 3.87% |
| Danaher Corp | 3.61% |
| Medtronic PLC | 3.54% |
XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.
Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.
Risk Analysis
| IJR | XLV | |
| Mean Return | 1.21 | 1.27 |
| R-squared | 76.03 | 58.19 |
| Std. Deviation | 18.68 | 12.94 |
| Alpha | -3.7 | 7.75 |
| Beta | 1.2 | 0.7 |
| Sharpe Ratio | 0.74 | 1.13 |
| Treynor Ratio | 10.77 | 21.1 |
The iShares Core S&P Small-Cap ETF (IJR) has a Standard Deviation of 18.68 with a Treynor Ratio of 10.77 and a Beta of 1.2. Its Alpha is -3.7 while IJR’s Mean Return is 1.21. Furthermore, the fund has a Sharpe Ratio of 0.74 and a R-squared of 76.03.
The Health Care Select Sector SPDR Fund (XLV) has a Mean Return of 1.27 with a Alpha of 7.75 and a R-squared of 58.19. Its Beta is 0.7 while XLV’s Treynor Ratio is 21.1. Furthermore, the fund has a Standard Deviation of 12.94 and a Sharpe Ratio of 1.13.
IJR’s Mean Return is 0.06 points lower than that of XLV and its R-squared is 17.84 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than XLV. The Alpha and Beta of IJR are 11.45 points lower and 0.50 points higher than XLV’s Alpha and Beta.
Performance
Annual Returns
| Year | IJR | XLV |
| 2020 | 11.24% | 13.33% |
| 2019 | 22.79% | 20.63% |
| 2018 | -8.43% | 6.3% |
| 2017 | 13.2% | 21.7% |
| 2016 | 26.49% | -2.83% |
| 2015 | -2.0% | 6.82% |
| 2014 | 5.67% | 25.17% |
| 2013 | 41.36% | 41.24% |
| 2012 | 16.28% | 17.56% |
| 2011 | 0.9% | 12.44% |
| 2010 | 26.14% | 2.91% |
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 XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IJR | $10,000 | $38,800 | 13.97% |
| XLV | $10,000 | $44,147 | 15.02% |
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 XLV, the end total would have been $44,147. This equates to a $34,147 profit over 11 years and a compound annual growth rate (CAGR) of 15.02%.
IJR’s CAGR is 1.06 percentage points lower than that of XLV and as a result, would have yielded $5,347 less on a $10,000 investment. Thus, IJR performed worse than XLV by 1.06% 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.
