IVW vs. XLV: What’s The Difference?

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

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

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

Summary

IVW XLV
Name iShares S&P 500 Growth ETF Health Care Select Sector SPDR Fund
Category Large Growth Health
Issuer iShares SPDR State Street Global Advisors
AUM 35.72B 27.88B
Avg. Return 16.74% 15.02%
Div. Yield 0.61% 1.4%
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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.

IVW’s dividend yield is 0.79% lower than that of XLV (0.61% vs. 1.4%). Also, IVW yielded on average 1.71% more per year over the past decade (16.74% vs. 15.02%). The expense ratio of IVW is 0.06 percentage points higher than XLV’s (0.18% vs. 0.12%).

Fund Composition

Industry Exposure

IVW vs. XLV - Industry Exposure

IVW XLV
Technology 37.8% 0.0%
Industrials 5.72% 0.0%
Energy 0.06% 0.0%
Communication Services 15.44% 0.0%
Utilities 0.47% 0.0%
Healthcare 11.88% 100.0%
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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.

XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, 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 XLV (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 XLV (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%.

XLV - Holdings

XLV Holdings Weight
Johnson & Johnson 9.19%
UnitedHealth Group Inc 8.01%
Pfizer Inc 4.64%
Abbott Laboratories 4.36%
AbbVie Inc 4.21%
Thermo Fisher Scientific Inc 4.2%
Merck & Co Inc 4.17%
Eli Lilly and Co 3.87%
Danaher Corp 3.61%
Medtronic PLC 3.54%

XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.

Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.

Risk Analysis

IVW XLV
Mean Return 1.44 1.27
R-squared 93.82 58.19
Std. Deviation 13.77 12.94
Alpha 2.19 7.75
Beta 0.98 0.7
Sharpe Ratio 1.21 1.13
Treynor Ratio 17.24 21.1

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

The Health Care Select Sector SPDR Fund (XLV) has a Beta of 0.7 with a R-squared of 58.19 and a Treynor Ratio of 21.1. Its Alpha is 7.75 while XLV’s Standard Deviation is 12.94. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Mean Return of 1.27.

IVW’s Mean Return is 0.17 points higher than that of XLV and its R-squared is 35.63 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than XLV. The Alpha and Beta of IVW are 5.56 points lower and 0.28 points higher than XLV’s Alpha and Beta.

Performance

Annual Returns

IVW vs. XLV - Annual Returns

Year IVW XLV
2020 33.21% 13.33%
2019 30.91% 20.63%
2018 -0.17% 6.3%
2017 27.2% 21.7%
2016 6.74% -2.83%
2015 5.33% 6.82%
2014 14.67% 25.17%
2013 32.48% 41.24%
2012 14.39% 17.56%
2011 4.49% 12.44%
2010 14.84% 2.91%

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 XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% respectively.

Portfolio Growth

IVW vs. XLV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
XLV $10,000 $44,147 15.02%

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 XLV, the end total would have been $44,147. This equates to a $34,147 profit over 11 years and a compound annual growth rate (CAGR) of 15.02%.

IVW’s CAGR is 1.71 percentage points higher than that of XLV and as a result, would have yielded $7,768 more on a $10,000 investment. Thus, IVW outperformed XLV by 1.71% annually.


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