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ITOT vs. XLC: What’s The Difference?

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between ITOT and XLC? And which fund is better?

The expense ratio of ITOT is 0.09 percentage points lower than XLC’s (0.03% vs. 0.12%). ITOT also has a higher exposure to the technology sector and a higher standard deviation. Overall, ITOT has provided lower returns than XLC over the past ten years.

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

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Summary

ITOTXLC
NameiShares Core S&P Total U.S. Stock Market ETFCommunication Services Select Sector SPDR Fund
CategoryLarge BlendCommunications
IssueriSharesSPDR State Street Global Advisors
AUM41.97B14.09B
Avg. Return14.59%29.04%
Div. Yield1.2%0.62%
Expense Ratio0.03%0.12%

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.

The Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.

ITOT’s dividend yield is 0.58% higher than that of XLC (1.2% vs. 0.62%). Also, ITOT yielded on average 14.44% less per year over the past decade (14.59% vs. 29.04%). The expense ratio of ITOT is 0.09 percentage points lower than XLC’s (0.03% vs. 0.12%).

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Fund Composition

Industry Exposure

ITOT vs. XLC - Industry Exposure

ITOTXLC
Technology24.49%0.0%
Industrials9.21%0.0%
Energy2.51%0.0%
Communication Services10.54%100.0%
Utilities2.35%0.0%
Healthcare13.59%0.0%
Consumer Defensive5.79%0.0%
Real Estate3.67%0.0%
Financial Services13.69%0.0%
Consumer Cyclical11.69%0.0%
Basic Materials2.47%0.0%

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.

ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.

The Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services 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.

XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

ITOT is 24.49% more exposed to the Technology sector than XLC (24.49% vs 0.0%). ITOT’s exposure to Financial Services and Healthcare stocks is 13.69% higher and 13.59% higher respectively (13.69% vs. 0.0% and 13.59% vs. 0.0%). In total, Basic Materials, Energy, and Real Estate also make up 8.65% more of the fund’s holdings compared to XLC (8.65% vs. 0.00%).

Holdings

ITOT - Holdings

ITOT HoldingsWeight
Apple Inc5.07%
Microsoft Corp4.75%
Amazon.com Inc3.16%
Facebook Inc Class A1.89%
Alphabet Inc Class A1.79%
Alphabet Inc Class C1.71%
Tesla Inc1.17%
Berkshire Hathaway Inc Class B1.17%
NVIDIA Corp1.08%
JPMorgan Chase & Co1.02%

ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.

Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.

XLC - Holdings

XLC HoldingsWeight
Facebook Inc A23.75%
Alphabet Inc A11.49%
Alphabet Inc Class C11.16%
Netflix Inc4.78%
Charter Communications Inc A4.65%
Comcast Corp Class A4.44%
T-Mobile US Inc4.41%
The Walt Disney Co4.39%
AT&T Inc4.35%
Verizon Communications Inc4.33%

XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.

Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.

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Risk Analysis

ITOTXLC
Mean Return1.270
R-squared99.40
Std. Deviation14.020
Alpha-0.540
Beta1.030
Sharpe Ratio1.040
Treynor Ratio14.130

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Sharpe Ratio of 1.04 with a Alpha of -0.54 and a Beta of 1.03. Its R-squared is 99.4 while ITOT’s Mean Return is 1.27. Furthermore, the fund has a Treynor Ratio of 14.13 and a Standard Deviation of 14.02.

The Communication Services Select Sector SPDR Fund (XLC) has a Treynor Ratio of 0 with a Beta of 0 and a Mean Return of 0. Its R-squared is 0 while XLC’s Alpha is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.

ITOT’s Mean Return is 1.27 points higher than that of XLC and its R-squared is 99.40 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than XLC. The Alpha and Beta of ITOT are 0.54 points lower and 1.03 points higher than XLC’s Alpha and Beta.

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Performance

Annual Returns

ITOT vs. XLC - Annual Returns

YearITOTXLC
202020.75%26.85%
201930.87%31.22%
2018-5.27%0.0%
201721.23%0.0%
201612.59%0.0%
20150.96%0.0%
201413.01%0.0%
201332.67%0.0%
201215.98%0.0%
20111.55%0.0%
201016.15%0.0%

ITOT had its best year in 2013 with an annual return of 32.67%. ITOT’s worst year over the past decade yielded -5.27% and occurred in 2018. In most years the iShares Core S&P Total U.S. Stock Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.01%, 15.98%, and 16.15% respectively.

The year 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

ITOT vs. XLC - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ITOT$10,000$15,80214.59%
XLC$10,000$16,64529.04%

A $10,000 investment in ITOT would have resulted in a final balance of $15,802. This is a profit of $5,802 over 2 years and amounts to a compound annual growth rate (CAGR) of 14.59%.

With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.

ITOT’s CAGR is 14.44 percentage points lower than that of XLC and as a result, would have yielded $843 less on a $10,000 investment. Thus, ITOT performed worse than XLC by 14.44% annually.


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