The iShares Russell 1000 Value ETF (IWD) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between IWD and XLY? And which fund is better?
The expense ratio of IWD is 0.07 percentage points higher than XLY’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 XLY over the past ten years.
In this article, we’ll compare IWD vs. XLY. We’ll look at industry exposure and fund composition, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss IWD’s and XLY’s annual returns, holdings, and performance and examine how these affect their overall returns.
Summary
| IWD | XLY | |
| Name | iShares Russell 1000 Value ETF | Consumer Discretionary Select Sector SPDR Fund |
| Category | Large Value | Consumer Cyclical |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 54.1B | 20.21B |
| Avg. Return | 11.40% | 18.86% |
| Div. Yield | 1.57% | 0.63% |
| 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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.
IWD’s dividend yield is 0.94% higher than that of XLY (1.57% vs. 0.63%). Also, IWD yielded on average 7.46% less per year over the past decade (11.40% vs. 18.86%). The expense ratio of IWD is 0.07 percentage points higher than XLY’s (0.19% vs. 0.12%).
Fund Composition
Industry Exposure
| IWD | XLY | |
| Technology | 10.28% | 0.57% |
| Industrials | 11.77% | 0.0% |
| 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% | 5.34% |
| Real Estate | 4.94% | 0.0% |
| Financial Services | 20.43% | 0.0% |
| Consumer Cyclical | 5.62% | 94.1% |
| 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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.
XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.
IWD is 20.43% more exposed to the Financial Services sector than XLY (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 XLY (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%.
| XLY Holdings | Weight |
| Amazon.com Inc | 22.9% |
| Tesla Inc | 13.5% |
| The Home Depot Inc | 8.74% |
| McDonald’s Corp | 4.5% |
| Nike Inc B | 4.45% |
| Lowe’s Companies Inc | 3.58% |
| Starbucks Corp | 3.44% |
| Target Corp | 3.12% |
| Booking Holdings Inc | 2.35% |
| TJX Companies Inc | 2.12% |
XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.
Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.
Risk Analysis
| IWD | XLY | |
| Mean Return | 1.03 | 1.47 |
| R-squared | 92.38 | 80.84 |
| Std. Deviation | 14.35 | 15.97 |
| Alpha | -3.23 | 6.96 |
| Beta | 1.02 | 1.02 |
| Sharpe Ratio | 0.81 | 1.06 |
| Treynor Ratio | 11.06 | 16.69 |
The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a Beta of 1.02 and a Alpha of -3.23. Its Mean Return is 1.03 while IWD’s Sharpe Ratio is 0.81. Furthermore, the fund has a R-squared of 92.38 and a Standard Deviation of 14.35.
The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Beta of 1.02 with a R-squared of 80.84 and a Alpha of 6.96. Its Standard Deviation is 15.97 while XLY’s Treynor Ratio is 16.69. Furthermore, the fund has a Sharpe Ratio of 1.06 and a Mean Return of 1.47.
IWD’s Mean Return is 0.44 points lower than that of XLY and its R-squared is 11.54 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than XLY. The Alpha and Beta of IWD are 10.19 points lower and 0.00 points lower than XLY’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | XLY |
| 2020 | 2.67% | 29.66% |
| 2019 | 26.34% | 28.43% |
| 2018 | -8.4% | 1.66% |
| 2017 | 13.47% | 22.77% |
| 2016 | 17.09% | 5.87% |
| 2015 | -3.95% | 9.93% |
| 2014 | 13.21% | 9.49% |
| 2013 | 32.18% | 42.74% |
| 2012 | 17.28% | 23.6% |
| 2011 | 0.21% | 5.98% |
| 2010 | 15.3% | 27.36% |
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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| XLY | $10,000 | $63,066 | 18.86% |
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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.
IWD’s CAGR is 7.46 percentage points lower than that of XLY and as a result, would have yielded $32,320 less on a $10,000 investment. Thus, IWD performed worse than XLY by 7.46% 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.
