IVW vs. XLI: What’s The Difference?

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

The expense ratio of IVW is 0.06 percentage points higher than XLI’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 XLI over the past ten years.

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

Summary

IVW XLI
Name iShares S&P 500 Growth ETF Industrial Select Sector SPDR Fund
Category Large Growth Industrials
Issuer iShares SPDR State Street Global Advisors
AUM 35.72B 19.33B
Avg. Return 16.74% 14.44%
Div. Yield 0.61% 1.25%
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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.

IVW’s dividend yield is 0.64% lower than that of XLI (0.61% vs. 1.25%). Also, IVW yielded on average 2.29% more per year over the past decade (16.74% vs. 14.44%). The expense ratio of IVW is 0.06 percentage points higher than XLI’s (0.18% vs. 0.12%).

Fund Composition

Industry Exposure

IVW vs. XLI - Industry Exposure

IVW XLI
Technology 37.8% 1.82%
Industrials 5.72% 97.49%
Energy 0.06% 0.0%
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% 0.69%
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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.

IVW is 35.98% more exposed to the Technology sector than XLI (37.8% vs 1.82%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 15.44% higher and 14.56% higher respectively (15.44% vs. 0.0% and 15.25% vs. 0.69%). In total, Utilities, Real Estate, and Basic Materials also make up 3.23% more of the fund’s holdings compared to XLI (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%.

XLI - Holdings

XLI Holdings Weight
Honeywell International Inc 4.9%
United Parcel Service Inc Class B 4.84%
Union Pacific Corp 4.7%
Boeing Co 4.24%
Raytheon Technologies Corp 4.16%
Caterpillar Inc 3.84%
General Electric Co 3.8%
3M Co 3.7%
Deere & Co 3.54%
Lockheed Martin Corp 2.98%

XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.

Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.

Risk Analysis

IVW XLI
Mean Return 1.44 1.14
R-squared 93.82 78.97
Std. Deviation 13.77 17.13
Alpha 2.19 2.38
Beta 0.98 1.08
Sharpe Ratio 1.21 0.76
Treynor Ratio 17.24 11.34

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

The Industrial Select Sector SPDR Fund (XLI) has a Treynor Ratio of 11.34 with a Standard Deviation of 17.13 and a Beta of 1.08. Its Mean Return is 1.14 while XLI’s R-squared is 78.97. Furthermore, the fund has a Alpha of 2.38 and a Sharpe Ratio of 0.76.

IVW’s Mean Return is 0.30 points higher than that of XLI and its R-squared is 14.85 points higher. With a Standard Deviation of 13.77, IVW is slightly less volatile than XLI. The Alpha and Beta of IVW are 0.19 points lower and 0.10 points lower than XLI’s Alpha and Beta.

Performance

Annual Returns

IVW vs. XLI - Annual Returns

Year IVW XLI
2020 33.21% 11.0%
2019 30.91% 29.11%
2018 -0.17% -13.1%
2017 27.2% 23.85%
2016 6.74% 19.93%
2015 5.33% -4.27%
2014 14.67% 10.44%
2013 32.48% 40.44%
2012 14.39% 14.86%
2011 4.49% -1.01%
2010 14.84% 27.62%

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 2013 was the strongest year for XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.

Portfolio Growth

IVW vs. XLI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
XLI $10,000 $39,853 14.44%

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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.

IVW’s CAGR is 2.29 percentage points higher than that of XLI and as a result, would have yielded $12,062 more on a $10,000 investment. Thus, IVW outperformed XLI by 2.29% annually.


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