The iShares Russell 1000 Value ETF (IWD) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between IWD and XLI? And which fund is better?
The expense ratio of IWD is 0.07 percentage points higher than XLI’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 lower returns than XLI over the past ten years.
In this article, we’ll compare IWD vs. XLI. We’ll look at risk metrics and industry exposure, as well as at their performance and fund composition. Moreover, I’ll also discuss IWD’s and XLI’s holdings, annual returns, and portfolio growth and examine how these affect their overall returns.
Summary
| IWD | XLI | |
| Name | iShares Russell 1000 Value ETF | Industrial Select Sector SPDR Fund |
| Category | Large Value | Industrials |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 54.1B | 19.33B |
| Avg. Return | 11.40% | 14.44% |
| Div. Yield | 1.57% | 1.25% |
| 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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.
IWD’s dividend yield is 0.32% higher than that of XLI (1.57% vs. 1.25%). Also, IWD yielded on average 3.04% less per year over the past decade (11.40% vs. 14.44%). The expense ratio of IWD is 0.07 percentage points higher than XLI’s (0.19% vs. 0.12%).
Fund Composition
Industry Exposure
| IWD | XLI | |
| Technology | 10.28% | 1.82% |
| Industrials | 11.77% | 97.49% |
| Energy | 4.76% | 0.0% |
| 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% | 0.69% |
| 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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.
IWD is 20.43% more exposed to the Financial Services sector than XLI (20.43% vs 0.0%). IWD’s exposure to Healthcare and Industrials stocks is 17.78% higher and 85.72% lower respectively (17.78% vs. 0.0% and 11.77% vs. 97.49%). In total, Energy, Utilities, and Real Estate also make up 14.58% more of the fund’s holdings compared to XLI (14.58% vs. 0.00%).
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%.
| XLI Holdings | Weight |
| Honeywell International Inc | 4.9% |
| United Parcel Service Inc Class B | 4.84% |
| Union Pacific Corp | 4.7% |
| Boeing Co | 4.24% |
| Raytheon Technologies Corp | 4.16% |
| Caterpillar Inc | 3.84% |
| General Electric Co | 3.8% |
| 3M Co | 3.7% |
| Deere & Co | 3.54% |
| Lockheed Martin Corp | 2.98% |
XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.
Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.
Risk Analysis
| IWD | XLI | |
| Mean Return | 1.03 | 1.14 |
| R-squared | 92.38 | 78.97 |
| Std. Deviation | 14.35 | 17.13 |
| Alpha | -3.23 | 2.38 |
| Beta | 1.02 | 1.08 |
| Sharpe Ratio | 0.81 | 0.76 |
| Treynor Ratio | 11.06 | 11.34 |
The iShares Russell 1000 Value ETF (IWD) has a Alpha of -3.23 with a Mean Return of 1.03 and a Sharpe Ratio of 0.81. Its R-squared is 92.38 while IWD’s Treynor Ratio is 11.06. Furthermore, the fund has a Standard Deviation of 14.35 and a Beta of 1.02.
The Industrial Select Sector SPDR Fund (XLI) has a R-squared of 78.97 with a Alpha of 2.38 and a Treynor Ratio of 11.34. Its Standard Deviation is 17.13 while XLI’s Beta is 1.08. Furthermore, the fund has a Mean Return of 1.14 and a Sharpe Ratio of 0.76.
IWD’s Mean Return is 0.11 points lower than that of XLI and its R-squared is 13.41 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than XLI. The Alpha and Beta of IWD are 5.61 points lower and 0.06 points lower than XLI’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | XLI |
| 2020 | 2.67% | 11.0% |
| 2019 | 26.34% | 29.11% |
| 2018 | -8.4% | -13.1% |
| 2017 | 13.47% | 23.85% |
| 2016 | 17.09% | 19.93% |
| 2015 | -3.95% | -4.27% |
| 2014 | 13.21% | 10.44% |
| 2013 | 32.18% | 40.44% |
| 2012 | 17.28% | 14.86% |
| 2011 | 0.21% | -1.01% |
| 2010 | 15.3% | 27.62% |
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 2013 was the strongest year for XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| XLI | $10,000 | $39,853 | 14.44% |
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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.
IWD’s CAGR is 3.04 percentage points lower than that of XLI and as a result, would have yielded $9,107 less on a $10,000 investment. Thus, IWD performed worse than XLI by 3.04% annually.
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