The iShares Russell 1000 Growth ETF (IWF) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between IWF and XLC? And which fund is better?
The expense ratio of IWF is 0.07 percentage points higher than XLC’s (0.19% vs. 0.12%). IWF also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWF has provided lower returns than XLC over the past ten years.
In this article, we’ll compare IWF vs. XLC. We’ll look at industry exposure and holdings, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss IWF’s and XLC’s performance, risk metrics, and annual returns and examine how these affect their overall returns.
Summary
| IWF | XLC | |
| Name | iShares Russell 1000 Growth ETF | Communication Services Select Sector SPDR Fund |
| Category | Large Growth | Communications |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 72.16B | 14.09B |
| Avg. Return | 17.72% | 29.04% |
| Div. Yield | 0.52% | 0.62% |
| Expense Ratio | 0.19% | 0.12% |
The iShares Russell 1000 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% with an expense ratio of 0.19%.
The Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
IWF’s dividend yield is 0.10% lower than that of XLC (0.52% vs. 0.62%). Also, IWF yielded on average 11.31% less per year over the past decade (17.72% vs. 29.04%). The expense ratio of IWF is 0.07 percentage points higher than XLC’s (0.19% vs. 0.12%).
Fund Composition
Industry Exposure
| IWF | XLC | |
| Technology | 39.29% | 0.0% |
| Industrials | 6.19% | 0.0% |
| Energy | 0.28% | 0.0% |
| Communication Services | 12.82% | 100.0% |
| Utilities | 0.03% | 0.0% |
| Healthcare | 9.23% | 0.0% |
| Consumer Defensive | 4.31% | 0.0% |
| Real Estate | 1.85% | 0.0% |
| Financial Services | 7.36% | 0.0% |
| Consumer Cyclical | 17.62% | 0.0% |
| Basic Materials | 1.01% | 0.0% |
The iShares Russell 1000 Growth ETF (IWF) has the most exposure to the Technology sector at 39.29%. This is followed by Consumer Cyclical and Communication Services at 17.62% and 12.82% respectively. Energy (0.28%), Basic Materials (1.01%), and Real Estate (1.85%) only make up 3.14% of the fund’s total assets.
IWF’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Communication Services stocks at 4.31%, 6.19%, 7.36%, 9.23%, and 12.82%.
The Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services 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.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
IWF is 39.29% more exposed to the Technology sector than XLC (39.29% vs 0.0%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 17.62% higher and 87.18% lower respectively (17.62% vs. 0.0% and 12.82% vs. 100.0%). In total, Energy, Basic Materials, and Real Estate also make up 3.14% more of the fund’s holdings compared to XLC (3.14% vs. 0.00%).
Holdings
| IWF Holdings | Weight |
| Apple Inc | 10.51% |
| Microsoft Corp | 9.85% |
| Amazon.com Inc | 6.63% |
| Facebook Inc Class A | 3.91% |
| Alphabet Inc Class A | 3.2% |
| Alphabet Inc Class C | 3.03% |
| Tesla Inc | 2.45% |
| NVIDIA Corp | 2.14% |
| Visa Inc Class A | 1.91% |
| The Home Depot Inc | 1.62% |
IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.
Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
Risk Analysis
| IWF | XLC | |
| Mean Return | 1.48 | 0 |
| R-squared | 92.93 | 0 |
| Std. Deviation | 14.42 | 0 |
| Alpha | 2.16 | 0 |
| Beta | 1.03 | 0 |
| Sharpe Ratio | 1.19 | 0 |
| Treynor Ratio | 17.1 | 0 |
The iShares Russell 1000 Growth ETF (IWF) has a Sharpe Ratio of 1.19 with a Beta of 1.03 and a Mean Return of 1.48. Its Treynor Ratio is 17.1 while IWF’s Alpha is 2.16. Furthermore, the fund has a Standard Deviation of 14.42 and a R-squared of 92.93.
The Communication Services Select Sector SPDR Fund (XLC) has a Standard Deviation of 0 with a Treynor Ratio of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while XLC’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Beta of 0.
IWF’s Mean Return is 1.48 points higher than that of XLC and its R-squared is 92.93 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than XLC. The Alpha and Beta of IWF are 2.16 points higher and 1.03 points higher than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | IWF | XLC |
| 2020 | 38.21% | 26.85% |
| 2019 | 36.08% | 31.22% |
| 2018 | -1.68% | 0.0% |
| 2017 | 29.96% | 0.0% |
| 2016 | 6.92% | 0.0% |
| 2015 | 5.48% | 0.0% |
| 2014 | 12.84% | 0.0% |
| 2013 | 33.19% | 0.0% |
| 2012 | 15.03% | 0.0% |
| 2011 | 2.47% | 0.0% |
| 2010 | 16.47% | 0.0% |
IWF had its best year in 2020 with an annual return of 38.21%. IWF’s worst year over the past decade yielded -1.68% and occurred in 2018. In most years the iShares Russell 1000 Growth ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.84%, 15.03%, and 16.47% respectively.
The year 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWF | $10,000 | $18,807 | 17.72% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in IWF would have resulted in a final balance of $18,807. This is a profit of $8,807 over 2 years and amounts to a compound annual growth rate (CAGR) of 17.72%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
IWF’s CAGR is 11.31 percentage points lower than that of XLC and as a result, would have yielded $2,162 more on a $10,000 investment. Thus, IWF performed worse than XLC by 11.31% annually.
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