The iShares Russell 1000 Value ETF (IWD) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between IWD and XLC? And which fund is better?
The expense ratio of IWD is 0.07 percentage points higher than XLC’s (0.19% vs. 0.12%). IWD also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided lower returns than XLC over the past ten years.
In this article, we’ll compare IWD vs. XLC. We’ll look at industry exposure and fund composition, as well as at their performance and portfolio growth. Moreover, I’ll also discuss IWD’s and XLC’s holdings, annual returns, and risk metrics and examine how these affect their overall returns.
|Name||iShares Russell 1000 Value ETF||Communication Services Select Sector SPDR Fund|
|Issuer||iShares||SPDR State Street Global Advisors|
The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
The Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
IWD’s dividend yield is 0.95% higher than that of XLC (1.57% vs. 0.62%). Also, IWD yielded on average 17.64% less per year over the past decade (11.40% vs. 29.04%). The expense ratio of IWD is 0.07 percentage points higher than XLC’s (0.19% vs. 0.12%).
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The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.
IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.
The Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services 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.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
IWD is 20.43% more exposed to the Financial Services sector than XLC (20.43% vs 0.0%). IWD’s exposure to Healthcare and Industrials stocks is 17.78% higher and 11.77% higher respectively (17.78% vs. 0.0% and 11.77% vs. 0.0%). In total, Energy, Utilities, and Real Estate also make up 14.58% more of the fund’s holdings compared to XLC (14.58% vs. 0.00%).
|Berkshire Hathaway Inc Class B||2.58%|
|JPMorgan Chase & Co||2.25%|
|Johnson & Johnson||2.24%|
|UnitedHealth Group Inc||1.78%|
|Procter & Gamble Co||1.71%|
|The Walt Disney Co||1.5%|
|Bank of America Corp||1.43%|
|Comcast Corp Class A||1.33%|
|Exxon Mobil Corp||1.2%|
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
|Facebook Inc A||23.75%|
|Alphabet Inc A||11.49%|
|Alphabet Inc Class C||11.16%|
|Charter Communications Inc A||4.65%|
|Comcast Corp Class A||4.44%|
|T-Mobile US Inc||4.41%|
|The Walt Disney Co||4.39%|
|Verizon Communications Inc||4.33%|
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
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The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a R-squared of 92.38 and a Alpha of -3.23. Its Beta is 1.02 while IWD’s Mean Return is 1.03. Furthermore, the fund has a Standard Deviation of 14.35 and a Sharpe Ratio of 0.81.
The Communication Services Select Sector SPDR Fund (XLC) has a Treynor Ratio of 0 with a Mean Return of 0 and a Standard Deviation of 0. Its R-squared is 0 while XLC’s Sharpe Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Beta of 0.
IWD’s Mean Return is 1.03 points higher than that of XLC and its R-squared is 92.38 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than XLC. The Alpha and Beta of IWD are 3.23 points lower and 1.02 points higher than XLC’s Alpha and Beta.
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IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% respectively.
The year 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWD would have resulted in a final balance of $12,971. This is a profit of $2,971 over 2 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
IWD’s CAGR is 17.64 percentage points lower than that of XLC and as a result, would have yielded $3,674 less on a $10,000 investment. Thus, IWD performed worse than XLC by 17.64% annually.
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