IVW vs. XLE: What’s The Difference?

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

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

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

Summary

IVW XLE
Name iShares S&P 500 Growth ETF Energy Select Sector SPDR Fund
Category Large Growth Equity Energy
Issuer iShares SPDR State Street Global Advisors
AUM 35.72B 25.55B
Avg. Return 16.74% 1.28%
Div. Yield 0.61% 3.92%
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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.

IVW’s dividend yield is 3.31% lower than that of XLE (0.61% vs. 3.92%). Also, IVW yielded on average 15.46% more per year over the past decade (16.74% vs. 1.28%). The expense ratio of IVW is 0.06 percentage points higher than XLE’s (0.18% vs. 0.12%).

Fund Composition

Industry Exposure

IVW vs. XLE - Industry Exposure

IVW XLE
Technology 37.8% 0.0%
Industrials 5.72% 0.0%
Energy 0.06% 100.0%
Communication Services 15.44% 0.0%
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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.

XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (37.8% vs 0.0%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 15.44% higher and 15.25% higher respectively (15.44% vs. 0.0% 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 XLE (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%.

XLE - Holdings

XLE Holdings Weight
Exxon Mobil Corp 23.7%
Chevron Corp 20.03%
ConocoPhillips 4.64%
EOG Resources Inc 4.46%
Schlumberger Ltd 4.43%
Marathon Petroleum Corp 4.17%
Pioneer Natural Resources Co 4.08%
Phillips 66 4.07%
Kinder Morgan Inc Class P 3.85%
Williams Companies Inc 3.5%

XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.

Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.

Risk Analysis

IVW XLE
Mean Return 1.44 0.32
R-squared 93.82 61.84
Std. Deviation 13.77 27.52
Alpha 2.19 -11.98
Beta 0.98 1.54
Sharpe Ratio 1.21 0.12
Treynor Ratio 17.24 -0.4

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

The Energy Select Sector SPDR Fund (XLE) has a Sharpe Ratio of 0.12 with a R-squared of 61.84 and a Mean Return of 0.32. Its Treynor Ratio is -0.4 while XLE’s Beta is 1.54. Furthermore, the fund has a Standard Deviation of 27.52 and a Alpha of -11.98.

IVW’s Mean Return is 1.12 points higher than that of XLE and its R-squared is 31.98 points higher. With a Standard Deviation of 13.77, IVW is slightly less volatile than XLE. The Alpha and Beta of IVW are 14.17 points higher and 0.56 points lower than XLE’s Alpha and Beta.

Performance

Annual Returns

IVW vs. XLE - Annual Returns

Year IVW XLE
2020 33.21% -32.56%
2019 30.91% 11.87%
2018 -0.17% -18.1%
2017 27.2% -1.01%
2016 6.74% 27.95%
2015 5.33% -21.47%
2014 14.67% -8.61%
2013 32.48% 26.16%
2012 14.39% 5.17%
2011 4.49% 2.98%
2010 14.84% 21.7%

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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.

Portfolio Growth

IVW vs. XLE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
XLE $10,000 $9,339 1.28%

A $10,000 investment in IVW would have resulted in a final balance of $51,915. This is a profit of $41,915 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

With a $10,000 investment in XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.

IVW’s CAGR is 15.46 percentage points higher than that of XLE and as a result, would have yielded $42,576 more on a $10,000 investment. Thus, IVW outperformed XLE by 15.46% annually.


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