IWB vs. XLE: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between IWB and XLE? And which fund is better?

The expense ratio of IWB is 0.03 percentage points higher than XLE’s (0.15% vs. 0.12%). IWB also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWB has provided higher returns than XLE over the past ten years.

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

Summary

IWB XLE
Name iShares Russell 1000 ETF Energy Select Sector SPDR Fund
Category Large Blend Equity Energy
Issuer iShares SPDR State Street Global Advisors
AUM 30.54B 25.55B
Avg. Return 14.64% 1.28%
Div. Yield 1.14% 3.92%
Expense Ratio 0.15% 0.12%

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

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%.

IWB’s dividend yield is 2.78% lower than that of XLE (1.14% vs. 3.92%). Also, IWB yielded on average 13.36% more per year over the past decade (14.64% vs. 1.28%). The expense ratio of IWB is 0.03 percentage points higher than XLE’s (0.15% vs. 0.12%).

Fund Composition

Industry Exposure

IWB vs. XLE - Industry Exposure

IWB XLE
Technology 25.33% 0.0%
Industrials 8.88% 0.0%
Energy 2.44% 100.0%
Communication Services 10.83% 0.0%
Utilities 2.36% 0.0%
Healthcare 13.35% 0.0%
Consumer Defensive 5.97% 0.0%
Real Estate 3.34% 0.0%
Financial Services 13.64% 0.0%
Consumer Cyclical 11.85% 0.0%
Basic Materials 2.02% 0.0%

The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

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%.

IWB is 25.33% more exposed to the Technology sector than XLE (25.33% vs 0.0%). IWB’s exposure to Financial Services and Healthcare stocks is 13.64% higher and 13.35% higher respectively (13.64% vs. 0.0% and 13.35% vs. 0.0%). In total, Utilities, Energy, and Real Estate also make up 91.86% less of the fund’s holdings compared to XLE (8.14% vs. 100.00%).

Holdings

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

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

IWB XLE
Mean Return 1.27 0.32
R-squared 99.73 61.84
Std. Deviation 13.87 27.52
Alpha -0.38 -11.98
Beta 1.02 1.54
Sharpe Ratio 1.05 0.12
Treynor Ratio 14.31 -0.4

The iShares Russell 1000 ETF (IWB) has a R-squared of 99.73 with a Standard Deviation of 13.87 and a Sharpe Ratio of 1.05. Its Treynor Ratio is 14.31 while IWB’s Mean Return is 1.27. Furthermore, the fund has a Alpha of -0.38 and a Beta of 1.02.

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

IWB’s Mean Return is 0.95 points higher than that of XLE and its R-squared is 37.89 points higher. With a Standard Deviation of 13.87, IWB is slightly less volatile than XLE. The Alpha and Beta of IWB are 11.60 points higher and 0.52 points lower than XLE’s Alpha and Beta.

Performance

Annual Returns

IWB vs. XLE - Annual Returns

Year IWB XLE
2020 20.8% -32.56%
2019 31.26% 11.87%
2018 -4.91% -18.1%
2017 21.53% -1.01%
2016 11.91% 27.95%
2015 0.82% -21.47%
2014 13.08% -8.61%
2013 32.93% 26.16%
2012 16.27% 5.17%
2011 1.36% 2.98%
2010 15.94% 21.7%

IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% 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

IWB vs. XLE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $42,462 14.64%
XLE $10,000 $9,339 1.28%

A $10,000 investment in IWB would have resulted in a final balance of $42,462. This is a profit of $32,462 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

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%.

IWB’s CAGR is 13.36 percentage points higher than that of XLE and as a result, would have yielded $33,123 more on a $10,000 investment. Thus, IWB outperformed XLE by 13.36% 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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

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

Leave a Reply