The iShares Core S&P 500 ETF (IVV) and the Technology Select Sector SPDR Fund (XLK) are both among the Top 100 ETFs. IVV is a iShares Large Blend fund and XLK is a SPDR State Street Global Advisors Technology fund. So, what’s the difference between IVV and XLK? And which fund is better?
The expense ratio of IVV is 0.09 percentage points lower than XLK’s (0.03% vs. 0.12%). IVV also has a lower exposure to the technology sector and a lower standard deviation. Overall, IVV has provided lower returns than XLK over the past ten years.
In this article, we’ll compare IVV vs. XLK. We’ll look at performance and industry exposure, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss IVV’s and XLK’s holdings, risk metrics, and fund composition and examine how these affect their overall returns.
Summary
| IVV | XLK | |
| Name | iShares Core S&P 500 ETF | Technology Select Sector SPDR Fund |
| Category | Large Blend | Technology |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 294.95B | 42.3B |
| Avg. Return | 14.48% | 20.02% |
| Div. Yield | 1.28% | 0.73% |
| Expense Ratio | 0.03% | 0.12% |
The iShares Core S&P 500 ETF (IVV) is a Large Blend fund that is issued by iShares. It currently has 294.95B total assets under management and has yielded an average annual return of 14.48% over the past 10 years. The fund has a dividend yield of 1.28% with an expense ratio of 0.03%.
The Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% with an expense ratio of 0.12%.
IVV’s dividend yield is 0.55% higher than that of XLK (1.28% vs. 0.73%). Also, IVV yielded on average 5.55% less per year over the past decade (14.48% vs. 20.02%). The expense ratio of IVV is 0.09 percentage points lower than XLK’s (0.03% vs. 0.12%).
Fund Composition
Industry Exposure
| IVV | XLK | |
| Technology | 24.64% | 87.54% |
| Industrials | 8.73% | 1.75% |
| Energy | 2.55% | 0.0% |
| Communication Services | 11.24% | 0.0% |
| Utilities | 2.49% | 0.0% |
| Healthcare | 13.52% | 0.0% |
| Consumer Defensive | 6.34% | 0.0% |
| Real Estate | 2.63% | 0.0% |
| Financial Services | 13.86% | 10.71% |
| Consumer Cyclical | 11.74% | 0.0% |
| Basic Materials | 2.27% | 0.0% |
The iShares Core S&P 500 ETF (IVV) has the most exposure to the Technology sector at 24.64%. This is followed by Financial Services and Healthcare at 13.86% and 13.52% respectively. Utilities (2.49%), Energy (2.55%), and Real Estate (2.63%) only make up 7.67% of the fund’s total assets.
IVV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.34%, 8.73%, 11.24%, 11.74%, and 13.52%.
The Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 87.54%. This is followed by Financial Services and Industrials at 10.71% and 1.75% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLK’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 1.75%.
IVV is 62.90% less exposed to the Technology sector than XLK (24.64% vs 87.54%). IVV’s exposure to Financial Services and Healthcare stocks is 3.15% higher and 13.52% higher respectively (13.86% vs. 10.71% and 13.52% vs. 0.0%). In total, Utilities, Energy, and Real Estate also make up 7.67% more of the fund’s holdings compared to XLK (7.67% vs. 0.00%).
Holdings
| IVV Holdings | Weight |
| Apple Inc | 6.14% |
| Microsoft Corp | 5.76% |
| Amazon.com Inc | 3.83% |
| Facebook Inc Class A | 2.29% |
| Alphabet Inc Class A | 2.17% |
| Alphabet Inc Class C | 2.07% |
| Tesla Inc | 1.42% |
| Berkshire Hathaway Inc Class B | 1.42% |
| NVIDIA Corp | 1.3% |
| JPMorgan Chase & Co | 1.23% |
IVV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 6.14%, 5.76%, 3.83%, 2.29%, and 2.17%.
Alphabet Inc Class C (2.07%), Tesla Inc (1.42%), and Berkshire Hathaway Inc Class B (1.42%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IVV’s holdings at 1.3% and 1.23%.
| XLK Holdings | Weight |
| Apple Inc | 21.45% |
| Microsoft Corp | 20.37% |
| NVIDIA Corp | 4.98% |
| Visa Inc Class A | 3.95% |
| PayPal Holdings Inc | 3.42% |
| Mastercard Inc A | 3.19% |
| Adobe Inc | 2.8% |
| Salesforce.com Inc | 2.26% |
| Intel Corp | 2.26% |
| Cisco Systems Inc | 2.23% |
XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.
Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.
Performance
Annual Returns
| Year | IVV | XLK |
| 2020 | 18.37% | 43.67% |
| 2019 | 31.44% | 49.97% |
| 2018 | -4.42% | -1.56% |
| 2017 | 21.79% | 34.27% |
| 2016 | 11.9% | 14.81% |
| 2015 | 1.34% | 5.62% |
| 2014 | 13.62% | 17.75% |
| 2013 | 32.31% | 25.98% |
| 2012 | 15.91% | 15.47% |
| 2011 | 2.03% | 2.69% |
| 2010 | 14.96% | 11.6% |
IVV had its best year in 2013 with an annual return of 32.31%. IVV’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the iShares Core S&P 500 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.62%, 14.96%, and 15.91% respectively.
The year 2019 was the strongest year for XLK, returning 49.97% on an annual basis. The poorest year for XLK in the last ten years was 2018, with a yield of -1.56%. Most years the Technology Select Sector SPDR Fund has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 14.81%, 15.47%, and 17.75% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IVV | $10,000 | $41,976 | 14.48% |
| XLK | $10,000 | $67,790 | 20.02% |
A $10,000 investment in IVV would have resulted in a final balance of $41,976. This is a profit of $31,976 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.48%.
With a $10,000 investment in XLK, the end total would have been $67,790. This equates to a $57,790 profit over 11 years and a compound annual growth rate (CAGR) of 20.02%.
IVV’s CAGR is 5.55 percentage points lower than that of XLK and as a result, would have yielded $25,814 less on a $10,000 investment. Thus, IVV performed worse than XLK by 5.55% annually.
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