The iShares Russell 1000 Growth ETF (IWF) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between IWF and XLV? And which fund is better?
The expense ratio of IWF is 0.07 percentage points higher than XLV’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 higher returns than XLV over the past ten years.
In this article, we’ll compare IWF vs. XLV. We’ll look at annual returns and risk metrics, as well as at their holdings and performance. Moreover, I’ll also discuss IWF’s and XLV’s fund composition, portfolio growth, and industry exposure and examine how these affect their overall returns.
|Name||iShares Russell 1000 Growth ETF||Health Care Select Sector SPDR Fund|
|Issuer||iShares||SPDR State Street Global Advisors|
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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.
IWF’s dividend yield is 0.88% lower than that of XLV (0.52% vs. 1.4%). Also, IWF yielded on average 2.70% more per year over the past decade (17.72% vs. 15.02%). The expense ratio of IWF is 0.07 percentage points higher than XLV’s (0.19% vs. 0.12%).
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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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.
XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, 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 XLV (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 XLV (3.14% vs. 0.00%).
|Facebook Inc Class A||3.91%|
|Alphabet Inc Class A||3.2%|
|Alphabet Inc Class C||3.03%|
|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%.
|Johnson & Johnson||9.19%|
|UnitedHealth Group Inc||8.01%|
|Thermo Fisher Scientific Inc||4.2%|
|Merck & Co Inc||4.17%|
|Eli Lilly and Co||3.87%|
XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.
Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.
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The iShares Russell 1000 Growth ETF (IWF) has a Mean Return of 1.48 with a R-squared of 92.93 and a Alpha of 2.16. Its Treynor Ratio is 17.1 while IWF’s Standard Deviation is 14.42. Furthermore, the fund has a Sharpe Ratio of 1.19 and a Beta of 1.03.
The Health Care Select Sector SPDR Fund (XLV) has a Sharpe Ratio of 1.13 with a Standard Deviation of 12.94 and a Mean Return of 1.27. Its Treynor Ratio is 21.1 while XLV’s Alpha is 7.75. Furthermore, the fund has a R-squared of 58.19 and a Beta of 0.7.
IWF’s Mean Return is 0.21 points higher than that of XLV and its R-squared is 34.74 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than XLV. The Alpha and Beta of IWF are 5.59 points lower and 0.33 points higher than XLV’s Alpha and Beta.
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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 XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 XLV, the end total would have been $44,147. This equates to a $34,147 profit over 11 years and a compound annual growth rate (CAGR) of 15.02%.
IWF’s CAGR is 2.70 percentage points higher than that of XLV and as a result, would have yielded $11,773 more on a $10,000 investment. Thus, IWF outperformed XLV by 2.70% annually.
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