IWD vs. XLY: What’s The Difference?

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%).

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Fund Composition

Industry Exposure

IWD vs. XLY - 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

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

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%.

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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.

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Performance

Annual Returns

IWD vs. XLY - 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

IWD vs. XLY - 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.


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