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IVE vs. XLI: What’s The Difference?

The iShares S&P 500 Value ETF (IVE) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. IVE is a iShares Large Value fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between IVE and XLI? And which fund is better?

The expense ratio of IVE is 0.06 percentage points higher than XLI’s (0.18% vs. 0.12%). IVE also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IVE has provided lower returns than XLI over the past 11 years.

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

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Summary

IVEXLI
NameiShares S&P 500 Value ETFIndustrial Select Sector SPDR Fund
CategoryLarge ValueIndustrials
IssueriSharesSPDR State Street Global Advisors
AUM22.4B19.33B
Avg. Return11.68%14.44%
Div. Yield1.88%1.25%
Expense Ratio0.18%0.12%

The iShares S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

The Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.

IVE’s dividend yield is 0.63% higher than that of XLI (1.88% vs. 1.25%). Also, IVE yielded on average 2.76% less per year over the past decade (11.68% vs. 14.44%). The expense ratio of IVE is 0.06 percentage points higher than XLI’s (0.18% vs. 0.12%).

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Fund Composition

Industry Exposure

IVE vs. XLI - Industry Exposure

IVEXLI
Technology9.41%1.82%
Industrials12.19%97.49%
Energy5.43%0.0%
Communication Services6.4%0.0%
Utilities4.82%0.0%
Healthcare15.4%0.0%
Consumer Defensive9.23%0.0%
Real Estate4.38%0.0%
Financial Services22.06%0.0%
Consumer Cyclical7.68%0.69%
Basic Materials2.99%0.0%

The iShares S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.

IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.

The Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.

IVE is 22.06% more exposed to the Financial Services sector than XLI (22.06% vs 0.0%). IVE’s exposure to Healthcare and Industrials stocks is 15.40% higher and 85.30% lower respectively (15.4% vs. 0.0% and 12.19% vs. 97.49%). In total, Real Estate, Utilities, and Energy also make up 14.63% more of the fund’s holdings compared to XLI (14.63% vs. 0.00%).

Holdings

IVE - Holdings

IVE HoldingsWeight
Berkshire Hathaway Inc Class B3.05%
JPMorgan Chase & Co2.65%
The Walt Disney Co1.85%
Bank of America Corp1.67%
Johnson & Johnson1.57%
Exxon Mobil Corp1.41%
Pfizer Inc1.38%
Cisco Systems Inc1.35%
Verizon Communications Inc1.33%
Intel Corp1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

XLI - Holdings

XLI HoldingsWeight
Honeywell International Inc4.9%
United Parcel Service Inc Class B4.84%
Union Pacific Corp4.7%
Boeing Co4.24%
Raytheon Technologies Corp4.16%
Caterpillar Inc3.84%
General Electric Co3.8%
3M Co3.7%
Deere & Co3.54%
Lockheed Martin Corp2.98%

XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.

Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.

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Risk Analysis

IVEXLI
Mean Return1.051.14
R-squared92.0878.97
Std. Deviation14.317.13
Alpha-2.92.38
Beta1.011.08
Sharpe Ratio0.830.76
Treynor Ratio11.4111.34

The iShares S&P 500 Value ETF (IVE) has a Standard Deviation of 14.3 with a Sharpe Ratio of 0.83 and a Alpha of -2.9. Its Mean Return is 1.05 while IVE’s Beta is 1.01. Furthermore, the fund has a R-squared of 92.08 and a Treynor Ratio of 11.41.

The Industrial Select Sector SPDR Fund (XLI) has a Mean Return of 1.14 with a Standard Deviation of 17.13 and a Treynor Ratio of 11.34. Its Sharpe Ratio is 0.76 while XLI’s R-squared is 78.97. Furthermore, the fund has a Alpha of 2.38 and a Beta of 1.08.

IVE’s Mean Return is 0.09 points lower than that of XLI and its R-squared is 13.11 points higher. With a Standard Deviation of 14.3, IVE is slightly less volatile than XLI. The Alpha and Beta of IVE are 5.28 points lower and 0.07 points lower than XLI’s Alpha and Beta.

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Performance

Annual Returns

IVE vs. XLI - Annual Returns

YearIVEXLI
20201.24%11.0%
201931.71%29.11%
2018-9.09%-13.1%
201715.19%23.85%
201617.17%19.93%
2015-3.24%-4.27%
201412.14%10.44%
201331.69%40.44%
201217.45%14.86%
2011-0.63%-1.01%
201014.9%27.62%

IVE had its best year in 2019 with an annual return of 31.71%. IVE’s worst year over the past decade yielded -9.09% and occurred in 2018. In most years the iShares S&P 500 Value ETF provided moderate returns such as in 2014, 2010, and 2017 where annual returns amounted to 12.14%, 14.9%, and 15.19% respectively.

The year 2013 was the strongest year for XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.

Portfolio Growth

IVE vs. XLI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IVE$10,000$31,35011.68%
XLI$10,000$39,85314.44%

A $10,000 investment in IVE would have resulted in a final balance of $31,350. This is a profit of $21,350 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.68%.

With a $10,000 investment in XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.

IVE’s CAGR is 2.76 percentage points lower than that of XLI and as a result, would have yielded $8,503 less on a $10,000 investment. Thus, IVE performed worse than XLI by 2.76% annually.


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