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.
|Name||iShares Core Total USD Bond Market ETF||Communication Services Select Sector SPDR Fund|
|Issuer||iShares||SPDR State Street Global Advisors|
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%).
|IUSB Bond Sectors||Weight|
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.
|Facebook Inc A||23.75%|
|Alphabet Inc A||11.49%|
|Alphabet Inc Class C||11.16%|
|Charter Communications Inc A||4.65%|
|Comcast Corp Class A||4.44%|
|T-Mobile US Inc||4.41%|
|The Walt Disney Co||4.39%|
|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%.
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.
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
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