Skip to content

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.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IVWXLC
NameiShares S&P 500 Growth ETFCommunication Services Select Sector SPDR Fund
CategoryLarge GrowthCommunications
IssueriSharesSPDR State Street Global Advisors
AUM35.72B14.09B
Avg. Return16.74%29.04%
Div. Yield0.61%0.62%
Expense Ratio0.18%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%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

IVW vs. XLC - Industry Exposure

IVWXLC
Technology37.8%0.0%
Industrials5.72%0.0%
Energy0.06%0.0%
Communication Services15.44%100.0%
Utilities0.47%0.0%
Healthcare11.88%0.0%
Consumer Defensive3.84%0.0%
Real Estate1.11%0.0%
Financial Services6.78%0.0%
Consumer Cyclical15.25%0.0%
Basic Materials1.65%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 HoldingsWeight
Apple Inc11.46%
Microsoft Corp10.75%
Amazon.com Inc7.14%
Facebook Inc Class A4.28%
Alphabet Inc Class A4.06%
Alphabet Inc Class C3.86%
Tesla Inc2.65%
NVIDIA Corp2.43%
PayPal Holdings Inc1.62%
Adobe Inc1.49%

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 HoldingsWeight
Facebook Inc A23.75%
Alphabet Inc A11.49%
Alphabet Inc Class C11.16%
Netflix Inc4.78%
Charter Communications Inc A4.65%
Comcast Corp Class A4.44%
T-Mobile US Inc4.41%
The Walt Disney Co4.39%
AT&T Inc4.35%
Verizon Communications Inc4.33%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IVWXLC
Mean Return1.440
R-squared93.820
Std. Deviation13.770
Alpha2.190
Beta0.980
Sharpe Ratio1.210
Treynor Ratio17.240

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.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

IVW vs. XLC - Annual Returns

YearIVWXLC
202033.21%26.85%
201930.91%31.22%
2018-0.17%0.0%
201727.2%0.0%
20166.74%0.0%
20155.33%0.0%
201414.67%0.0%
201332.48%0.0%
201214.39%0.0%
20114.49%0.0%
201014.84%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

FundInitial BalanceFinal BalanceCAGR
IVW$10,000$17,43816.74%
XLC$10,000$16,64529.04%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.