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IJR vs. XLY: What’s The Difference?

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

The expense ratio of IJR is 0.06 percentage points lower than XLY’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 XLY over the past ten years.

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

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Summary

IJRXLY
NameiShares Core S&P Small-Cap ETFConsumer Discretionary Select Sector SPDR Fund
CategorySmall BlendConsumer Cyclical
IssueriSharesSPDR State Street Global Advisors
AUM68.64B20.21B
Avg. Return13.97%18.86%
Div. Yield0.96%0.63%
Expense Ratio0.06%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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

IJR’s dividend yield is 0.33% higher than that of XLY (0.96% vs. 0.63%). Also, IJR yielded on average 4.90% less per year over the past decade (13.97% vs. 18.86%). The expense ratio of IJR is 0.06 percentage points lower than XLY’s (0.06% vs. 0.12%).

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Fund Composition

Industry Exposure

IJR vs. XLY - Industry Exposure

IJRXLY
Technology14.32%0.57%
Industrials17.31%0.0%
Energy4.0%0.0%
Communication Services2.59%0.0%
Utilities1.8%0.0%
Healthcare11.55%0.0%
Consumer Defensive4.01%5.34%
Real Estate9.55%0.0%
Financial Services15.91%0.0%
Consumer Cyclical13.61%94.1%
Basic Materials5.34%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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

IJR is 17.31% more exposed to the Industrials sector than XLY (17.31% vs 0.0%). IJR’s exposure to Financial Services and Technology stocks is 15.91% higher and 13.75% higher respectively (15.91% vs. 0.0% and 14.32% vs. 0.57%). In total, Communication Services, Energy, and Consumer Defensive also make up 5.26% more of the fund’s holdings compared to XLY (10.60% vs. 5.34%).

Holdings

IJR - Holdings

IJR HoldingsWeight
BlackRock Cash Funds Treasury SL Agency1.08%
GameStop Corp Class A0.86%
Omnicell Inc0.61%
Stamps.com Inc0.58%
Saia Inc0.57%
Power Integrations Inc0.57%
Exponent Inc0.54%
NeoGenomics Inc0.53%
Chart Industries Inc0.53%
Macy’s Inc0.51%

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%.

XLY - Holdings

XLY HoldingsWeight
Amazon.com Inc22.9%
Tesla Inc13.5%
The Home Depot Inc8.74%
McDonald’s Corp4.5%
Nike Inc B4.45%
Lowe’s Companies Inc3.58%
Starbucks Corp3.44%
Target Corp3.12%
Booking Holdings Inc2.35%
TJX Companies Inc2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

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Risk Analysis

IJRXLY
Mean Return1.211.47
R-squared76.0380.84
Std. Deviation18.6815.97
Alpha-3.76.96
Beta1.21.02
Sharpe Ratio0.741.06
Treynor Ratio10.7716.69

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

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Mean Return of 1.47 with a Beta of 1.02 and a Alpha of 6.96. Its R-squared is 80.84 while XLY’s Treynor Ratio is 16.69. Furthermore, the fund has a Standard Deviation of 15.97 and a Sharpe Ratio of 1.06.

IJR’s Mean Return is 0.26 points lower than that of XLY and its R-squared is 4.81 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than XLY. The Alpha and Beta of IJR are 10.66 points lower and 0.18 points higher than XLY’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. XLY - Annual Returns

YearIJRXLY
202011.24%29.66%
201922.79%28.43%
2018-8.43%1.66%
201713.2%22.77%
201626.49%5.87%
2015-2.0%9.93%
20145.67%9.49%
201341.36%42.74%
201216.28%23.6%
20110.9%5.98%
201026.14%27.36%

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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.

Portfolio Growth

IJR vs. XLY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IJR$10,000$38,80013.97%
XLY$10,000$63,06618.86%

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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.

IJR’s CAGR is 4.90 percentage points lower than that of XLY and as a result, would have yielded $24,266 less on a $10,000 investment. Thus, IJR performed worse than XLY by 4.90% annually.


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