IWF vs. XLI: What’s The Difference?

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

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

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

Summary

IWF XLI
Name iShares Russell 1000 Growth ETF Industrial Select Sector SPDR Fund
Category Large Growth Industrials
Issuer iShares SPDR State Street Global Advisors
AUM 72.16B 19.33B
Avg. Return 17.72% 14.44%
Div. Yield 0.52% 1.25%
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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.

IWF’s dividend yield is 0.73% lower than that of XLI (0.52% vs. 1.25%). Also, IWF yielded on average 3.28% more per year over the past decade (17.72% vs. 14.44%). The expense ratio of IWF is 0.07 percentage points higher than XLI’s (0.19% vs. 0.12%).

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Fund Composition

Industry Exposure

IWF vs. XLI - Industry Exposure

IWF XLI
Technology 39.29% 1.82%
Industrials 6.19% 97.49%
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% 0.0%
Consumer Cyclical 17.62% 0.69%
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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.

IWF is 37.47% more exposed to the Technology sector than XLI (39.29% vs 1.82%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 16.93% higher and 12.82% higher respectively (17.62% vs. 0.69% 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 XLI (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%.

XLI - Holdings

XLI Holdings Weight
Honeywell International Inc 4.9%
United Parcel Service Inc Class B 4.84%
Union Pacific Corp 4.7%
Boeing Co 4.24%
Raytheon Technologies Corp 4.16%
Caterpillar Inc 3.84%
General Electric Co 3.8%
3M Co 3.7%
Deere & Co 3.54%
Lockheed Martin Corp 2.98%

XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.

Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.

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Risk Analysis

IWF XLI
Mean Return 1.48 1.14
R-squared 92.93 78.97
Std. Deviation 14.42 17.13
Alpha 2.16 2.38
Beta 1.03 1.08
Sharpe Ratio 1.19 0.76
Treynor Ratio 17.1 11.34

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

The Industrial Select Sector SPDR Fund (XLI) has a Standard Deviation of 17.13 with a Mean Return of 1.14 and a R-squared of 78.97. Its Sharpe Ratio is 0.76 while XLI’s Alpha is 2.38. Furthermore, the fund has a Beta of 1.08 and a Treynor Ratio of 11.34.

IWF’s Mean Return is 0.34 points higher than that of XLI and its R-squared is 13.96 points higher. With a Standard Deviation of 14.42, IWF is slightly less volatile than XLI. The Alpha and Beta of IWF are 0.22 points lower and 0.05 points lower than XLI’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. XLI - Annual Returns

Year IWF XLI
2020 38.21% 11.0%
2019 36.08% 29.11%
2018 -1.68% -13.1%
2017 29.96% 23.85%
2016 6.92% 19.93%
2015 5.48% -4.27%
2014 12.84% 10.44%
2013 33.19% 40.44%
2012 15.03% 14.86%
2011 2.47% -1.01%
2010 16.47% 27.62%

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 XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.

Portfolio Growth

IWF vs. XLI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
XLI $10,000 $39,853 14.44%

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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.

IWF’s CAGR is 3.28 percentage points higher than that of XLI and as a result, would have yielded $16,067 more on a $10,000 investment. Thus, IWF outperformed XLI by 3.28% annually.


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