The iShares Core Total USD Bond Market ETF (IUSB) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. IUSB is a iShares N/A fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between IUSB and XLC? And which fund is better?
The expense ratio of IUSB is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%). IUSB is mostly comprised of AAA bonds while XLC has a high exposure to the communication services sector. Overall, IUSB has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare IUSB vs. XLC. We’ll look at annual returns and industry exposure, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss IUSB’s and XLC’s holdings, performance, and portfolio growth and examine how these affect their overall returns.
Summary
| IUSB | XLC | |
| Name | iShares Core Total USD Bond Market ETF | Communication Services Select Sector SPDR Fund |
| Category | N/A | Communications |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 14.49B | 14.09B |
| Avg. Return | 4.13% | 29.04% |
| Div. Yield | 2.1% | 0.62% |
| Expense Ratio | 0.06% | 0.12% |
The iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
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%.
IUSB’s dividend yield is 1.48% higher than that of XLC (2.1% vs. 0.62%). Also, IUSB yielded on average 24.91% less per year over the past decade (4.13% vs. 29.04%). The expense ratio of IUSB is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%).
Fund Composition
Holdings
| IUSB Bond Sectors | Weight |
| AAA | 58.32% |
| BBB | 16.98% |
| A | 12.27% |
| BB | 4.33% |
| AA | 3.36% |
| B | 2.8% |
| Others | 1.01% |
| Below B | 0.92% |
| US Government | 0.0% |
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
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%.
Risk Analysis
| IUSB | XLC | |
| Mean Return | 0 | 0 |
| R-squared | 0 | 0 |
| Std. Deviation | 0 | 0 |
| Alpha | 0 | 0 |
| Beta | 0 | 0 |
| Sharpe Ratio | 0 | 0 |
| Treynor Ratio | 0 | 0 |
The iShares Core Total USD Bond Market ETF (IUSB) has a Sharpe Ratio of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its R-squared is 0 while IUSB’s Beta is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.
The Communication Services Select Sector SPDR Fund (XLC) has a Alpha of 0 with a Mean Return of 0 and a Beta of 0. Its Standard Deviation is 0 while XLC’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.
IUSB’s Mean Return is 0.00 points lower than that of XLC and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IUSB is slightly less volatile than XLC. The Alpha and Beta of IUSB are 0.00 points lower and 0.00 points lower than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | IUSB | XLC |
| 2020 | 7.59% | 26.85% |
| 2019 | 9.26% | 31.22% |
| 2018 | -0.38% | 0.0% |
| 2017 | 4.06% | 0.0% |
| 2016 | 3.78% | 0.0% |
| 2015 | 0.46% | 0.0% |
| 2014 | 0.0% | 0.0% |
| 2013 | 0.0% | 0.0% |
| 2012 | 0.0% | 0.0% |
| 2011 | 0.0% | 0.0% |
| 2010 | 0.0% | 0.0% |
IUSB had its best year in 2019 with an annual return of 9.26%. IUSB’s worst year over the past decade yielded -0.38% and occurred in 2018. In most years the iShares Core Total USD Bond Market ETF provided moderate returns such as in 2011, 2010, and 2015 where annual returns amounted to 0.0%, 0.0%, and 0.46% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IUSB | $10,000 | $11,755 | 4.13% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in IUSB would have resulted in a final balance of $11,755. This is a profit of $1,755 over 2 years and amounts to a compound annual growth rate (CAGR) of 4.13%.
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%.
IUSB’s CAGR is 24.91 percentage points lower than that of XLC and as a result, would have yielded $4,890 less on a $10,000 investment. Thus, IUSB performed worse than XLC by 24.91% 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.
