The iShares Russell 1000 ETF (IWB) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between IWB and XLV? And which fund is better?
The expense ratio of IWB is 0.03 percentage points higher than XLV’s (0.15% vs. 0.12%). IWB also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWB has provided lower returns than XLV over the past ten years.
In this article, we’ll compare IWB vs. XLV. We’ll look at annual returns and industry exposure, as well as at their fund composition and performance. Moreover, I’ll also discuss IWB’s and XLV’s portfolio growth, holdings, and risk metrics and examine how these affect their overall returns.
|Name||iShares Russell 1000 ETF||Health Care Select Sector SPDR Fund|
|Issuer||iShares||SPDR State Street Global Advisors|
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 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%.
IWB’s dividend yield is 0.26% lower than that of XLV (1.14% vs. 1.4%). Also, IWB yielded on average 0.39% less per year over the past decade (14.64% vs. 15.02%). The expense ratio of IWB is 0.03 percentage points higher than XLV’s (0.15% vs. 0.12%).
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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 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%.
IWB is 25.33% more exposed to the Technology sector than XLV (25.33% vs 0.0%). IWB’s exposure to Financial Services and Healthcare stocks is 13.64% higher and 86.65% lower respectively (13.64% vs. 0.0% and 13.35% vs. 100.0%). In total, Utilities, Energy, and Real Estate also make up 8.14% more of the fund’s holdings compared to XLV (8.14% vs. 0.00%).
|Facebook Inc Class A||2.03%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.82%|
|Berkshire Hathaway Inc Class B||1.24%|
|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%.
|Johnson & Johnson||9.19%|
|UnitedHealth Group Inc||8.01%|
|Thermo Fisher Scientific Inc||4.2%|
|Merck & Co Inc||4.17%|
|Eli Lilly and Co||3.87%|
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%.
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The iShares Russell 1000 ETF (IWB) has a R-squared of 99.73 with a Sharpe Ratio of 1.05 and a Treynor Ratio of 14.31. Its Mean Return is 1.27 while IWB’s Standard Deviation is 13.87. Furthermore, the fund has a Alpha of -0.38 and a Beta of 1.02.
The Health Care Select Sector SPDR Fund (XLV) has a Mean Return of 1.27 with a Sharpe Ratio of 1.13 and a Beta of 0.7. Its R-squared is 58.19 while XLV’s Alpha is 7.75. Furthermore, the fund has a Standard Deviation of 12.94 and a Treynor Ratio of 21.1.
IWB’s Mean Return is 0.00 points lower than that of XLV and its R-squared is 41.54 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than XLV. The Alpha and Beta of IWB are 8.13 points lower and 0.32 points higher than XLV’s Alpha and Beta.
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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 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.
|Fund||Initial Balance||Final Balance||CAGR|
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 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%.
IWB’s CAGR is 0.39 percentage points lower than that of XLV and as a result, would have yielded $1,685 less on a $10,000 investment. Thus, IWB performed worse than XLV by 0.39% annually.
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