The iShares S&P 500 Growth ETF (IVW) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between IVW and XLY? And which fund is better?
The expense ratio of IVW is 0.06 percentage points higher than XLY’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 lower returns than XLY over the past ten years.
In this article, we’ll compare IVW vs. XLY. We’ll look at risk metrics and industry exposure, as well as at their annual returns and holdings. Moreover, I’ll also discuss IVW’s and XLY’s fund composition, performance, and portfolio growth and examine how these affect their overall returns.
Summary
| IVW | XLY | |
| Name | iShares S&P 500 Growth ETF | Consumer Discretionary Select Sector SPDR Fund |
| Category | Large Growth | Consumer Cyclical |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 35.72B | 20.21B |
| Avg. Return | 16.74% | 18.86% |
| Div. Yield | 0.61% | 0.63% |
| 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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.
IVW’s dividend yield is 0.02% lower than that of XLY (0.61% vs. 0.63%). Also, IVW yielded on average 2.13% less per year over the past decade (16.74% vs. 18.86%). The expense ratio of IVW is 0.06 percentage points higher than XLY’s (0.18% vs. 0.12%).
Fund Composition
Industry Exposure
| IVW | XLY | |
| Technology | 37.8% | 0.57% |
| Industrials | 5.72% | 0.0% |
| 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% | 5.34% |
| Real Estate | 1.11% | 0.0% |
| Financial Services | 6.78% | 0.0% |
| Consumer Cyclical | 15.25% | 94.1% |
| 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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.
XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.
IVW is 37.23% more exposed to the Technology sector than XLY (37.8% vs 0.57%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 15.44% higher and 78.85% lower respectively (15.44% vs. 0.0% and 15.25% vs. 94.1%). In total, Utilities, Real Estate, and Basic Materials also make up 3.23% more of the fund’s holdings compared to XLY (3.23% vs. 0.00%).
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%.
| XLY Holdings | Weight |
| Amazon.com Inc | 22.9% |
| Tesla Inc | 13.5% |
| The Home Depot Inc | 8.74% |
| McDonald’s Corp | 4.5% |
| Nike Inc B | 4.45% |
| Lowe’s Companies Inc | 3.58% |
| Starbucks Corp | 3.44% |
| Target Corp | 3.12% |
| Booking Holdings Inc | 2.35% |
| TJX Companies Inc | 2.12% |
XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.
Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.
Risk Analysis
| IVW | XLY | |
| Mean Return | 1.44 | 1.47 |
| R-squared | 93.82 | 80.84 |
| Std. Deviation | 13.77 | 15.97 |
| Alpha | 2.19 | 6.96 |
| Beta | 0.98 | 1.02 |
| Sharpe Ratio | 1.21 | 1.06 |
| Treynor Ratio | 17.24 | 16.69 |
The iShares S&P 500 Growth ETF (IVW) has a R-squared of 93.82 with a Beta of 0.98 and a Sharpe Ratio of 1.21. Its Mean Return is 1.44 while IVW’s Treynor Ratio is 17.24. Furthermore, the fund has a Standard Deviation of 13.77 and a Alpha of 2.19.
The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Standard Deviation of 15.97 with a Treynor Ratio of 16.69 and a Alpha of 6.96. Its R-squared is 80.84 while XLY’s Beta is 1.02. Furthermore, the fund has a Sharpe Ratio of 1.06 and a Mean Return of 1.47.
IVW’s Mean Return is 0.03 points lower than that of XLY and its R-squared is 12.98 points higher. With a Standard Deviation of 13.77, IVW is slightly less volatile than XLY. The Alpha and Beta of IVW are 4.77 points lower and 0.04 points lower than XLY’s Alpha and Beta.
Performance
Annual Returns
| Year | IVW | XLY |
| 2020 | 33.21% | 29.66% |
| 2019 | 30.91% | 28.43% |
| 2018 | -0.17% | 1.66% |
| 2017 | 27.2% | 22.77% |
| 2016 | 6.74% | 5.87% |
| 2015 | 5.33% | 9.93% |
| 2014 | 14.67% | 9.49% |
| 2013 | 32.48% | 42.74% |
| 2012 | 14.39% | 23.6% |
| 2011 | 4.49% | 5.98% |
| 2010 | 14.84% | 27.36% |
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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IVW | $10,000 | $51,915 | 16.74% |
| XLY | $10,000 | $63,066 | 18.86% |
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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.
IVW’s CAGR is 2.13 percentage points lower than that of XLY and as a result, would have yielded $11,151 less on a $10,000 investment. Thus, IVW performed worse than XLY by 2.13% annually.
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