The iShares S&P 500 Value ETF (IVE) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. IVE is a iShares Large Value fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between IVE and XLY? And which fund is better?
The expense ratio of IVE is 0.06 percentage points higher than XLY’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 XLY over the past 11 years.
In this article, we’ll compare IVE vs. XLY. We’ll look at fund composition and risk metrics, as well as at their industry exposure and holdings. Moreover, I’ll also discuss IVE’s and XLY’s performance, portfolio growth, and annual returns and examine how these affect their overall returns.
Summary
| IVE | XLY | |
| Name | iShares S&P 500 Value ETF | Consumer Discretionary Select Sector SPDR Fund |
| Category | Large Value | Consumer Cyclical |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 22.4B | 20.21B |
| Avg. Return | 11.68% | 18.86% |
| Div. Yield | 1.88% | 0.63% |
| Expense Ratio | 0.18% | 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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.
IVE’s dividend yield is 1.25% higher than that of XLY (1.88% vs. 0.63%). Also, IVE yielded on average 7.18% less per year over the past decade (11.68% vs. 18.86%). The expense ratio of IVE is 0.06 percentage points higher than XLY’s (0.18% vs. 0.12%).
Fund Composition
Industry Exposure
| IVE | XLY | |
| Technology | 9.41% | 0.57% |
| Industrials | 12.19% | 0.0% |
| Energy | 5.43% | 0.0% |
| Communication Services | 6.4% | 0.0% |
| Utilities | 4.82% | 0.0% |
| Healthcare | 15.4% | 0.0% |
| Consumer Defensive | 9.23% | 5.34% |
| Real Estate | 4.38% | 0.0% |
| Financial Services | 22.06% | 0.0% |
| Consumer Cyclical | 7.68% | 94.1% |
| Basic Materials | 2.99% | 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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.
XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.
IVE is 22.06% more exposed to the Financial Services sector than XLY (22.06% vs 0.0%). IVE’s exposure to Healthcare and Industrials stocks is 15.40% higher and 12.19% higher respectively (15.4% vs. 0.0% and 12.19% vs. 0.0%). In total, Real Estate, Utilities, and Energy also make up 14.63% more of the fund’s holdings compared to XLY (14.63% vs. 0.00%).
Holdings
| IVE Holdings | Weight |
| Berkshire Hathaway Inc Class B | 3.05% |
| JPMorgan Chase & Co | 2.65% |
| The Walt Disney Co | 1.85% |
| Bank of America Corp | 1.67% |
| Johnson & Johnson | 1.57% |
| Exxon Mobil Corp | 1.41% |
| Pfizer Inc | 1.38% |
| Cisco Systems Inc | 1.35% |
| Verizon Communications Inc | 1.33% |
| Intel Corp | 1.25% |
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%.
| XLY Holdings | Weight |
| Amazon.com Inc | 22.9% |
| Tesla Inc | 13.5% |
| The Home Depot Inc | 8.74% |
| McDonald’s Corp | 4.5% |
| Nike Inc B | 4.45% |
| Lowe’s Companies Inc | 3.58% |
| Starbucks Corp | 3.44% |
| Target Corp | 3.12% |
| Booking Holdings Inc | 2.35% |
| TJX Companies Inc | 2.12% |
XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.
Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.
Risk Analysis
| IVE | XLY | |
| Mean Return | 1.05 | 1.47 |
| R-squared | 92.08 | 80.84 |
| Std. Deviation | 14.3 | 15.97 |
| Alpha | -2.9 | 6.96 |
| Beta | 1.01 | 1.02 |
| Sharpe Ratio | 0.83 | 1.06 |
| Treynor Ratio | 11.41 | 16.69 |
The iShares S&P 500 Value ETF (IVE) has a Standard Deviation of 14.3 with a Alpha of -2.9 and a Treynor Ratio of 11.41. Its Sharpe Ratio is 0.83 while IVE’s Mean Return is 1.05. Furthermore, the fund has a R-squared of 92.08 and a Beta of 1.01.
The Consumer Discretionary Select Sector SPDR Fund (XLY) has a R-squared of 80.84 with a Beta of 1.02 and a Treynor Ratio of 16.69. Its Standard Deviation is 15.97 while XLY’s Alpha is 6.96. Furthermore, the fund has a Mean Return of 1.47 and a Sharpe Ratio of 1.06.
IVE’s Mean Return is 0.42 points lower than that of XLY and its R-squared is 11.24 points higher. With a Standard Deviation of 14.3, IVE is slightly less volatile than XLY. The Alpha and Beta of IVE are 9.86 points lower and 0.01 points lower than XLY’s Alpha and Beta.
Performance
Annual Returns
| Year | IVE | XLY |
| 2020 | 1.24% | 29.66% |
| 2019 | 31.71% | 28.43% |
| 2018 | -9.09% | 1.66% |
| 2017 | 15.19% | 22.77% |
| 2016 | 17.17% | 5.87% |
| 2015 | -3.24% | 9.93% |
| 2014 | 12.14% | 9.49% |
| 2013 | 31.69% | 42.74% |
| 2012 | 17.45% | 23.6% |
| 2011 | -0.63% | 5.98% |
| 2010 | 14.9% | 27.36% |
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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IVE | $10,000 | $31,350 | 11.68% |
| XLY | $10,000 | $63,066 | 18.86% |
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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.
IVE’s CAGR is 7.18 percentage points lower than that of XLY and as a result, would have yielded $31,716 less on a $10,000 investment. Thus, IVE performed worse than XLY by 7.18% annually.
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