IWF vs. XLF: What’s The Difference?

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

The expense ratio of IWF is 0.07 percentage points higher than XLF’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 XLF over the past ten years.

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

Summary

IWF XLF
Name iShares Russell 1000 Growth ETF Financial Select Sector SPDR Fund
Category Large Growth Financial
Issuer iShares SPDR State Street Global Advisors
AUM 72.16B 40.81B
Avg. Return 17.72% 12.17%
Div. Yield 0.52% 1.57%
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 Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.

IWF’s dividend yield is 1.05% lower than that of XLF (0.52% vs. 1.57%). Also, IWF yielded on average 5.56% more per year over the past decade (17.72% vs. 12.17%). The expense ratio of IWF is 0.07 percentage points higher than XLF’s (0.19% vs. 0.12%).

Fund Composition

Industry Exposure

IWF vs. XLF - Industry Exposure

IWF XLF
Technology 39.29% 0.0%
Industrials 6.19% 0.0%
Energy 0.28% 0.0%
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% 100.0%
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 Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLF’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, 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 XLF (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 3.14% more of the fund’s holdings compared to XLF (3.14% vs. 0.00%).

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%.

XLF - Holdings

XLF Holdings Weight
Berkshire Hathaway Inc Class B 12.83%
JPMorgan Chase & Co 11.47%
Bank of America Corp 7.57%
Wells Fargo & Co 4.56%
Citigroup Inc 3.56%
Morgan Stanley 3.32%
Goldman Sachs Group Inc 3.15%
BlackRock Inc 3.02%
Charles Schwab Corp 2.66%
American Express Co 2.62%

XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.

Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.

Risk Analysis

IWF XLF
Mean Return 1.48 1.21
R-squared 92.93 73.26
Std. Deviation 14.42 18.86
Alpha 2.16 2.63
Beta 1.03 1.15
Sharpe Ratio 1.19 0.74
Treynor Ratio 17.1 11.25

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

The Financial Select Sector SPDR Fund (XLF) has a Sharpe Ratio of 0.74 with a Beta of 1.15 and a Standard Deviation of 18.86. Its Treynor Ratio is 11.25 while XLF’s Mean Return is 1.21. Furthermore, the fund has a Alpha of 2.63 and a R-squared of 73.26.

IWF’s Mean Return is 0.27 points higher than that of XLF and its R-squared is 19.67 points higher. With a Standard Deviation of 14.42, IWF is slightly less volatile than XLF. The Alpha and Beta of IWF are 0.47 points lower and 0.12 points lower than XLF’s Alpha and Beta.

Performance

Annual Returns

IWF vs. XLF - Annual Returns

Year IWF XLF
2020 38.21% -1.68%
2019 36.08% 31.88%
2018 -1.68% -13.09%
2017 29.96% 22.03%
2016 6.92% 22.55%
2015 5.48% -1.6%
2014 12.84% 15.02%
2013 33.19% 35.37%
2012 15.03% 28.53%
2011 2.47% -17.16%
2010 16.47% 11.97%

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 2013 was the strongest year for XLF, returning 35.37% on an annual basis. The poorest year for XLF in the last ten years was 2011, with a yield of -17.16%. Most years the Financial Select Sector SPDR Fund has given investors modest returns, such as in 2010, 2014, and 2017, when gains were 11.97%, 15.02%, and 22.03% respectively.

Portfolio Growth

IWF vs. XLF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
XLF $10,000 $30,782 12.17%

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 XLF, the end total would have been $30,782. This equates to a $20,782 profit over 11 years and a compound annual growth rate (CAGR) of 12.17%.

IWF’s CAGR is 5.56 percentage points higher than that of XLF and as a result, would have yielded $25,138 more on a $10,000 investment. Thus, IWF outperformed XLF by 5.56% 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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply