IWR vs. XLC: What’s The Difference?

The iShares Russell Mid-Cap ETF (IWR) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between IWR and XLC? And which fund is better?

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

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

Summary

IWR XLC
Name iShares Russell Mid-Cap ETF Communication Services Select Sector SPDR Fund
Category Mid-Cap Blend Communications
Issuer iShares SPDR State Street Global Advisors
AUM 29.84B 14.09B
Avg. Return 14.15% 29.04%
Div. Yield 0.99% 0.62%
Expense Ratio 0.19% 0.12%

The iShares Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% 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%.

IWR’s dividend yield is 0.37% higher than that of XLC (0.99% vs. 0.62%). Also, IWR yielded on average 14.88% less per year over the past decade (14.15% vs. 29.04%). The expense ratio of IWR is 0.07 percentage points higher than XLC’s (0.19% vs. 0.12%).

Fund Composition

Industry Exposure

IWR vs. XLC - Industry Exposure

IWR XLC
Technology 19.67% 0.0%
Industrials 14.54% 0.0%
Energy 3.48% 0.0%
Communication Services 4.64% 100.0%
Utilities 4.46% 0.0%
Healthcare 11.76% 0.0%
Consumer Defensive 3.82% 0.0%
Real Estate 8.31% 0.0%
Financial Services 11.64% 0.0%
Consumer Cyclical 13.59% 0.0%
Basic Materials 4.1% 0.0%

The iShares Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

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%.

IWR is 19.67% more exposed to the Technology sector than XLC (19.67% vs 0.0%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 14.54% higher and 13.59% higher respectively (14.54% vs. 0.0% and 13.59% vs. 0.0%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 12.38% more of the fund’s holdings compared to XLC (12.38% vs. 0.00%).

Holdings

IWR - Holdings

IWR Holdings Weight
IDEXX Laboratories Inc 0.51%
DocuSign Inc 0.51%
Twitter Inc 0.48%
Chipotle Mexican Grill Inc 0.47%
Roku Inc Class A 0.44%
Marvell Technology Inc 0.44%
DexCom Inc 0.44%
Trane Technologies PLC 0.43%
MSCI Inc 0.43%
Carrier Global Corp Ordinary Shares 0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

XLC - Holdings

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

IWR XLC
Mean Return 1.17 0
R-squared 91.52 0
Std. Deviation 15.66 0
Alpha -2.8 0
Beta 1.11 0
Sharpe Ratio 0.86 0
Treynor Ratio 11.72 0

The iShares Russell Mid-Cap ETF (IWR) has a Beta of 1.11 with a Standard Deviation of 15.66 and a Alpha of -2.8. Its Sharpe Ratio is 0.86 while IWR’s R-squared is 91.52. Furthermore, the fund has a Mean Return of 1.17 and a Treynor Ratio of 11.72.

The Communication Services Select Sector SPDR Fund (XLC) has a R-squared of 0 with a Beta of 0 and a Treynor Ratio of 0. Its Alpha is 0 while XLC’s Standard Deviation is 0. Furthermore, the fund has a Mean Return of 0 and a Sharpe Ratio of 0.

IWR’s Mean Return is 1.17 points higher than that of XLC and its R-squared is 91.52 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than XLC. The Alpha and Beta of IWR are 2.80 points lower and 1.11 points higher than XLC’s Alpha and Beta.

Performance

Annual Returns

IWR vs. XLC - Annual Returns

Year IWR XLC
2020 16.91% 26.85%
2019 30.31% 31.22%
2018 -9.13% 0.0%
2017 18.32% 0.0%
2016 13.58% 0.0%
2015 -2.57% 0.0%
2014 13.03% 0.0%
2013 34.5% 0.0%
2012 17.13% 0.0%
2011 -1.67% 0.0%
2010 25.25% 0.0%

IWR had its best year in 2013 with an annual return of 34.5%. IWR’s worst year over the past decade yielded -9.13% and occurred in 2018. In most years the iShares Russell Mid-Cap ETF provided moderate returns such as in 2016, 2020, and 2012 where annual returns amounted to 13.58%, 16.91%, and 17.13% 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

IWR vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $15,234 14.15%
XLC $10,000 $16,645 29.04%

A $10,000 investment in IWR would have resulted in a final balance of $15,234. This is a profit of $5,234 over 2 years and amounts to a compound annual growth rate (CAGR) of 14.15%.

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%.

IWR’s CAGR is 14.88 percentage points lower than that of XLC and as a result, would have yielded $1,411 less on a $10,000 investment. Thus, IWR performed worse than XLC by 14.88% annually.


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