IWF vs. XLE: What’s The Difference?

The iShares Russell 1000 Growth ETF (IWF) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between IWF and XLE? And which fund is better?

The expense ratio of IWF is 0.07 percentage points higher than XLE’s (0.19% vs. 0.12%). IWF also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWF has provided higher returns than XLE over the past ten years.

In this article, we’ll compare IWF vs. XLE. We’ll look at holdings and fund composition, as well as at their risk metrics and performance. Moreover, I’ll also discuss IWF’s and XLE’s industry exposure, annual returns, and portfolio growth and examine how these affect their overall returns.

Summary

IWF XLE
Name iShares Russell 1000 Growth ETF Energy Select Sector SPDR Fund
Category Large Growth Equity Energy
Issuer iShares SPDR State Street Global Advisors
AUM 72.16B 25.55B
Avg. Return 17.72% 1.28%
Div. Yield 0.52% 3.92%
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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.

IWF’s dividend yield is 3.40% lower than that of XLE (0.52% vs. 3.92%). Also, IWF yielded on average 16.44% more per year over the past decade (17.72% vs. 1.28%). The expense ratio of IWF is 0.07 percentage points higher than XLE’s (0.19% vs. 0.12%).

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Fund Composition

Industry Exposure

IWF vs. XLE - Industry Exposure

IWF XLE
Technology 39.29% 0.0%
Industrials 6.19% 0.0%
Energy 0.28% 100.0%
Communication Services 12.82% 0.0%
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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.

XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (39.29% vs 0.0%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 17.62% higher and 12.82% higher respectively (17.62% vs. 0.0% and 12.82% vs. 0.0%). In total, Energy, Basic Materials, and Real Estate also make up 96.86% less of the fund’s holdings compared to XLE (3.14% vs. 100.00%).

Holdings

IWF - 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%.

XLE - Holdings

XLE Holdings Weight
Exxon Mobil Corp 23.7%
Chevron Corp 20.03%
ConocoPhillips 4.64%
EOG Resources Inc 4.46%
Schlumberger Ltd 4.43%
Marathon Petroleum Corp 4.17%
Pioneer Natural Resources Co 4.08%
Phillips 66 4.07%
Kinder Morgan Inc Class P 3.85%
Williams Companies Inc 3.5%

XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.

Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.

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Risk Analysis

IWF XLE
Mean Return 1.48 0.32
R-squared 92.93 61.84
Std. Deviation 14.42 27.52
Alpha 2.16 -11.98
Beta 1.03 1.54
Sharpe Ratio 1.19 0.12
Treynor Ratio 17.1 -0.4

The iShares Russell 1000 Growth ETF (IWF) has a Beta of 1.03 with a Mean Return of 1.48 and a Standard Deviation of 14.42. Its Alpha is 2.16 while IWF’s Sharpe Ratio is 1.19. Furthermore, the fund has a Treynor Ratio of 17.1 and a R-squared of 92.93.

The Energy Select Sector SPDR Fund (XLE) has a Treynor Ratio of -0.4 with a Standard Deviation of 27.52 and a Alpha of -11.98. Its R-squared is 61.84 while XLE’s Sharpe Ratio is 0.12. Furthermore, the fund has a Beta of 1.54 and a Mean Return of 0.32.

IWF’s Mean Return is 1.16 points higher than that of XLE and its R-squared is 31.09 points higher. With a Standard Deviation of 14.42, IWF is slightly less volatile than XLE. The Alpha and Beta of IWF are 14.14 points higher and 0.51 points lower than XLE’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. XLE - Annual Returns

Year IWF XLE
2020 38.21% -32.56%
2019 36.08% 11.87%
2018 -1.68% -18.1%
2017 29.96% -1.01%
2016 6.92% 27.95%
2015 5.48% -21.47%
2014 12.84% -8.61%
2013 33.19% 26.16%
2012 15.03% 5.17%
2011 2.47% 2.98%
2010 16.47% 21.7%

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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.

Portfolio Growth

IWF vs. XLE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
XLE $10,000 $9,339 1.28%

A $10,000 investment in IWF would have resulted in a final balance of $55,920. This is a profit of $45,920 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.72%.

With a $10,000 investment in XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.

IWF’s CAGR is 16.44 percentage points higher than that of XLE and as a result, would have yielded $46,581 more on a $10,000 investment. Thus, IWF outperformed XLE by 16.44% annually.


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