The iShares Russell 1000 Value ETF (IWD) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between IWD and XLV? And which fund is better?
The expense ratio of IWD is 0.07 percentage points higher than XLV’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 XLV over the past ten years.
In this article, we’ll compare IWD vs. XLV. We’ll look at holdings and industry exposure, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss IWD’s and XLV’s annual returns, portfolio growth, and performance and examine how these affect their overall returns.
Summary
| IWD | XLV | |
| Name | iShares Russell 1000 Value ETF | Health Care Select Sector SPDR Fund |
| Category | Large Value | Health |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 54.1B | 27.88B |
| Avg. Return | 11.40% | 15.02% |
| Div. Yield | 1.57% | 1.4% |
| 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 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%.
IWD’s dividend yield is 0.17% higher than that of XLV (1.57% vs. 1.4%). Also, IWD yielded on average 3.62% less per year over the past decade (11.40% vs. 15.02%). The expense ratio of IWD is 0.07 percentage points higher than XLV’s (0.19% vs. 0.12%).
Fund Composition
Industry Exposure
| IWD | XLV | |
| Technology | 10.28% | 0.0% |
| Industrials | 11.77% | 0.0% |
| Energy | 4.76% | 0.0% |
| Communication Services | 8.67% | 0.0% |
| Utilities | 4.88% | 0.0% |
| Healthcare | 17.78% | 100.0% |
| 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 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%.
IWD is 20.43% more exposed to the Financial Services sector than XLV (20.43% vs 0.0%). IWD’s exposure to Healthcare and Industrials stocks is 82.22% lower and 11.77% higher respectively (17.78% vs. 100.0% 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 XLV (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%.
| XLV Holdings | Weight |
| Johnson & Johnson | 9.19% |
| UnitedHealth Group Inc | 8.01% |
| Pfizer Inc | 4.64% |
| Abbott Laboratories | 4.36% |
| AbbVie Inc | 4.21% |
| Thermo Fisher Scientific Inc | 4.2% |
| Merck & Co Inc | 4.17% |
| Eli Lilly and Co | 3.87% |
| Danaher Corp | 3.61% |
| Medtronic PLC | 3.54% |
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%.
Risk Analysis
| IWD | XLV | |
| Mean Return | 1.03 | 1.27 |
| R-squared | 92.38 | 58.19 |
| Std. Deviation | 14.35 | 12.94 |
| Alpha | -3.23 | 7.75 |
| Beta | 1.02 | 0.7 |
| Sharpe Ratio | 0.81 | 1.13 |
| Treynor Ratio | 11.06 | 21.1 |
The iShares Russell 1000 Value ETF (IWD) has a Alpha of -3.23 with a Sharpe Ratio of 0.81 and a Standard Deviation of 14.35. Its Treynor Ratio is 11.06 while IWD’s Beta is 1.02. Furthermore, the fund has a Mean Return of 1.03 and a R-squared of 92.38.
The Health Care Select Sector SPDR Fund (XLV) has a Alpha of 7.75 with a Beta of 0.7 and a R-squared of 58.19. Its Treynor Ratio is 21.1 while XLV’s Sharpe Ratio is 1.13. Furthermore, the fund has a Standard Deviation of 12.94 and a Mean Return of 1.27.
IWD’s Mean Return is 0.24 points lower than that of XLV and its R-squared is 34.19 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than XLV. The Alpha and Beta of IWD are 10.98 points lower and 0.32 points higher than XLV’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | XLV |
| 2020 | 2.67% | 13.33% |
| 2019 | 26.34% | 20.63% |
| 2018 | -8.4% | 6.3% |
| 2017 | 13.47% | 21.7% |
| 2016 | 17.09% | -2.83% |
| 2015 | -3.95% | 6.82% |
| 2014 | 13.21% | 25.17% |
| 2013 | 32.18% | 41.24% |
| 2012 | 17.28% | 17.56% |
| 2011 | 0.21% | 12.44% |
| 2010 | 15.3% | 2.91% |
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 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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| XLV | $10,000 | $44,147 | 15.02% |
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 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%.
IWD’s CAGR is 3.62 percentage points lower than that of XLV and as a result, would have yielded $13,401 less on a $10,000 investment. Thus, IWD performed worse than XLV by 3.62% annually.
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