IVW vs. XLC: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between IVW and XLC? And which fund is better?

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

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

Summary

IVW XLC
Name iShares S&P 500 Growth ETF Communication Services Select Sector SPDR Fund
Category Large Growth Communications
Issuer iShares SPDR State Street Global Advisors
AUM 35.72B 14.09B
Avg. Return 16.74% 29.04%
Div. Yield 0.61% 0.62%
Expense Ratio 0.18% 0.12%

The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

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%.

IVW’s dividend yield is 0.01% lower than that of XLC (0.61% vs. 0.62%). Also, IVW yielded on average 12.30% less per year over the past decade (16.74% vs. 29.04%). The expense ratio of IVW is 0.06 percentage points higher than XLC’s (0.18% vs. 0.12%).

Fund Composition

Industry Exposure

IVW vs. XLC - Industry Exposure

IVW XLC
Technology 37.8% 0.0%
Industrials 5.72% 0.0%
Energy 0.06% 0.0%
Communication Services 15.44% 100.0%
Utilities 0.47% 0.0%
Healthcare 11.88% 0.0%
Consumer Defensive 3.84% 0.0%
Real Estate 1.11% 0.0%
Financial Services 6.78% 0.0%
Consumer Cyclical 15.25% 0.0%
Basic Materials 1.65% 0.0%

The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

The Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

IVW is 37.80% more exposed to the Technology sector than XLC (37.8% vs 0.0%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 84.56% lower and 15.25% higher respectively (15.44% vs. 100.0% and 15.25% vs. 0.0%). In total, Utilities, Real Estate, and Basic Materials also make up 3.23% more of the fund’s holdings compared to XLC (3.23% vs. 0.00%).

Holdings

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

XLC - Holdings

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

IVW XLC
Mean Return 1.44 0
R-squared 93.82 0
Std. Deviation 13.77 0
Alpha 2.19 0
Beta 0.98 0
Sharpe Ratio 1.21 0
Treynor Ratio 17.24 0

The iShares S&P 500 Growth ETF (IVW) has a Treynor Ratio of 17.24 with a Standard Deviation of 13.77 and a R-squared of 93.82. Its Mean Return is 1.44 while IVW’s Alpha is 2.19. Furthermore, the fund has a Sharpe Ratio of 1.21 and a Beta of 0.98.

The Communication Services Select Sector SPDR Fund (XLC) has a R-squared of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its Mean Return is 0 while XLC’s Beta is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.

IVW’s Mean Return is 1.44 points higher than that of XLC and its R-squared is 93.82 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than XLC. The Alpha and Beta of IVW are 2.19 points higher and 0.98 points higher than XLC’s Alpha and Beta.

Performance

Annual Returns

IVW vs. XLC - Annual Returns

Year IVW XLC
2020 33.21% 26.85%
2019 30.91% 31.22%
2018 -0.17% 0.0%
2017 27.2% 0.0%
2016 6.74% 0.0%
2015 5.33% 0.0%
2014 14.67% 0.0%
2013 32.48% 0.0%
2012 14.39% 0.0%
2011 4.49% 0.0%
2010 14.84% 0.0%

IVW had its best year in 2020 with an annual return of 33.21%. IVW’s worst year over the past decade yielded -0.17% and occurred in 2018. In most years the iShares S&P 500 Growth ETF provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 14.39%, 14.67%, and 14.84% 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

IVW vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $17,438 16.74%
XLC $10,000 $16,645 29.04%

A $10,000 investment in IVW would have resulted in a final balance of $17,438. This is a profit of $7,438 over 2 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

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%.

IVW’s CAGR is 12.30 percentage points lower than that of XLC and as a result, would have yielded $793 more on a $10,000 investment. Thus, IVW performed worse than XLC by 12.30% annually.


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