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ITOT vs. XLE: What’s The Difference?

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

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

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

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Summary

ITOTXLE
NameiShares Core S&P Total U.S. Stock Market ETFEnergy Select Sector SPDR Fund
CategoryLarge BlendEquity Energy
IssueriSharesSPDR State Street Global Advisors
AUM41.97B25.55B
Avg. Return14.59%1.28%
Div. Yield1.2%3.92%
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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.

ITOT’s dividend yield is 2.72% lower than that of XLE (1.2% vs. 3.92%). Also, ITOT yielded on average 13.31% more per year over the past decade (14.59% vs. 1.28%). The expense ratio of ITOT is 0.09 percentage points lower than XLE’s (0.03% vs. 0.12%).

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Fund Composition

Industry Exposure

ITOT vs. XLE - Industry Exposure

ITOTXLE
Technology24.49%0.0%
Industrials9.21%0.0%
Energy2.51%100.0%
Communication Services10.54%0.0%
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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.

XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (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 91.35% less of the fund’s holdings compared to XLE (8.65% vs. 100.00%).

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%.

XLE - Holdings

XLE HoldingsWeight
Exxon Mobil Corp23.7%
Chevron Corp20.03%
ConocoPhillips4.64%
EOG Resources Inc4.46%
Schlumberger Ltd4.43%
Marathon Petroleum Corp4.17%
Pioneer Natural Resources Co4.08%
Phillips 664.07%
Kinder Morgan Inc Class P3.85%
Williams Companies Inc3.5%

XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.

Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.

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Risk Analysis

ITOTXLE
Mean Return1.270.32
R-squared99.461.84
Std. Deviation14.0227.52
Alpha-0.54-11.98
Beta1.031.54
Sharpe Ratio1.040.12
Treynor Ratio14.13-0.4

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

The Energy Select Sector SPDR Fund (XLE) has a Standard Deviation of 27.52 with a R-squared of 61.84 and a Sharpe Ratio of 0.12. Its Treynor Ratio is -0.4 while XLE’s Mean Return is 0.32. Furthermore, the fund has a Alpha of -11.98 and a Beta of 1.54.

ITOT’s Mean Return is 0.95 points higher than that of XLE and its R-squared is 37.56 points higher. With a Standard Deviation of 14.02, ITOT is slightly less volatile than XLE. The Alpha and Beta of ITOT are 11.44 points higher and 0.51 points lower than XLE’s Alpha and Beta.

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Performance

Annual Returns

ITOT vs. XLE - Annual Returns

YearITOTXLE
202020.75%-32.56%
201930.87%11.87%
2018-5.27%-18.1%
201721.23%-1.01%
201612.59%27.95%
20150.96%-21.47%
201413.01%-8.61%
201332.67%26.16%
201215.98%5.17%
20111.55%2.98%
201016.15%21.7%

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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.

Portfolio Growth

ITOT vs. XLE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ITOT$10,000$42,31014.59%
XLE$10,000$9,3391.28%

A $10,000 investment in ITOT would have resulted in a final balance of $42,310. This is a profit of $32,310 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.59%.

With a $10,000 investment in XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.

ITOT’s CAGR is 13.31 percentage points higher than that of XLE and as a result, would have yielded $32,971 more on a $10,000 investment. Thus, ITOT outperformed XLE by 13.31% annually.


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