The iShares Russell 1000 Value ETF (IWD) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between IWD and XLE? And which fund is better?
The expense ratio of IWD is 0.07 percentage points higher than XLE’s (0.19% vs. 0.12%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided higher returns than XLE over the past ten years.
In this article, we’ll compare IWD vs. XLE. We’ll look at annual returns and holdings, as well as at their portfolio growth and performance. Moreover, I’ll also discuss IWD’s and XLE’s risk metrics, industry exposure, and fund composition and examine how these affect their overall returns.
Summary
| IWD | XLE | |
| Name | iShares Russell 1000 Value ETF | Energy Select Sector SPDR Fund |
| Category | Large Value | Equity Energy |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 54.1B | 25.55B |
| Avg. Return | 11.40% | 1.28% |
| Div. Yield | 1.57% | 3.92% |
| Expense Ratio | 0.19% | 0.12% |
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 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%.
IWD’s dividend yield is 2.35% lower than that of XLE (1.57% vs. 3.92%). Also, IWD yielded on average 10.12% more per year over the past decade (11.40% vs. 1.28%). The expense ratio of IWD is 0.07 percentage points higher than XLE’s (0.19% vs. 0.12%).
Fund Composition
Industry Exposure
| IWD | XLE | |
| Technology | 10.28% | 0.0% |
| Industrials | 11.77% | 0.0% |
| Energy | 4.76% | 100.0% |
| Communication Services | 8.67% | 0.0% |
| Utilities | 4.88% | 0.0% |
| Healthcare | 17.78% | 0.0% |
| Consumer Defensive | 7.76% | 0.0% |
| Real Estate | 4.94% | 0.0% |
| Financial Services | 20.43% | 0.0% |
| Consumer Cyclical | 5.62% | 0.0% |
| Basic Materials | 3.1% | 0.0% |
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 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%.
IWD is 20.43% more exposed to the Financial Services sector than XLE (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 85.42% less of the fund’s holdings compared to XLE (14.58% vs. 100.00%).
Holdings
| IWD Holdings | Weight |
| 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% |
| Pfizer Inc | 1.18% |
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%.
| 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
| IWD | XLE | |
| Mean Return | 1.03 | 0.32 |
| R-squared | 92.38 | 61.84 |
| Std. Deviation | 14.35 | 27.52 |
| Alpha | -3.23 | -11.98 |
| Beta | 1.02 | 1.54 |
| Sharpe Ratio | 0.81 | 0.12 |
| Treynor Ratio | 11.06 | -0.4 |
The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a Beta of 1.02 and a Sharpe Ratio of 0.81. Its Mean Return is 1.03 while IWD’s R-squared is 92.38. Furthermore, the fund has a Alpha of -3.23 and a Standard Deviation of 14.35.
The Energy Select Sector SPDR Fund (XLE) has a Treynor Ratio of -0.4 with a Standard Deviation of 27.52 and a Mean Return of 0.32. Its Sharpe Ratio is 0.12 while XLE’s R-squared is 61.84. Furthermore, the fund has a Beta of 1.54 and a Alpha of -11.98.
IWD’s Mean Return is 0.71 points higher than that of XLE and its R-squared is 30.54 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than XLE. The Alpha and Beta of IWD are 8.75 points higher and 0.52 points lower than XLE’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | XLE |
| 2020 | 2.67% | -32.56% |
| 2019 | 26.34% | 11.87% |
| 2018 | -8.4% | -18.1% |
| 2017 | 13.47% | -1.01% |
| 2016 | 17.09% | 27.95% |
| 2015 | -3.95% | -21.47% |
| 2014 | 13.21% | -8.61% |
| 2013 | 32.18% | 26.16% |
| 2012 | 17.28% | 5.17% |
| 2011 | 0.21% | 2.98% |
| 2010 | 15.3% | 21.7% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| XLE | $10,000 | $9,339 | 1.28% |
A $10,000 investment in IWD would have resulted in a final balance of $30,746. This is a profit of $20,746 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
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%.
IWD’s CAGR is 10.12 percentage points higher than that of XLE and as a result, would have yielded $21,407 more on a $10,000 investment. Thus, IWD outperformed XLE by 10.12% 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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
