Skip to content

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.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IWRXLC
NameiShares Russell Mid-Cap ETFCommunication Services Select Sector SPDR Fund
CategoryMid-Cap BlendCommunications
IssueriSharesSPDR State Street Global Advisors
AUM29.84B14.09B
Avg. Return14.15%29.04%
Div. Yield0.99%0.62%
Expense Ratio0.19%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%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

IWR vs. XLC - Industry Exposure

IWRXLC
Technology19.67%0.0%
Industrials14.54%0.0%
Energy3.48%0.0%
Communication Services4.64%100.0%
Utilities4.46%0.0%
Healthcare11.76%0.0%
Consumer Defensive3.82%0.0%
Real Estate8.31%0.0%
Financial Services11.64%0.0%
Consumer Cyclical13.59%0.0%
Basic Materials4.1%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 HoldingsWeight
IDEXX Laboratories Inc0.51%
DocuSign Inc0.51%
Twitter Inc0.48%
Chipotle Mexican Grill Inc0.47%
Roku Inc Class A0.44%
Marvell Technology Inc0.44%
DexCom Inc0.44%
Trane Technologies PLC0.43%
MSCI Inc0.43%
Carrier Global Corp Ordinary Shares0.43%

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 HoldingsWeight
Facebook Inc A23.75%
Alphabet Inc A11.49%
Alphabet Inc Class C11.16%
Netflix Inc4.78%
Charter Communications Inc A4.65%
Comcast Corp Class A4.44%
T-Mobile US Inc4.41%
The Walt Disney Co4.39%
AT&T Inc4.35%
Verizon Communications Inc4.33%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IWRXLC
Mean Return1.170
R-squared91.520
Std. Deviation15.660
Alpha-2.80
Beta1.110
Sharpe Ratio0.860
Treynor Ratio11.720

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.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

IWR vs. XLC - Annual Returns

YearIWRXLC
202016.91%26.85%
201930.31%31.22%
2018-9.13%0.0%
201718.32%0.0%
201613.58%0.0%
2015-2.57%0.0%
201413.03%0.0%
201334.5%0.0%
201217.13%0.0%
2011-1.67%0.0%
201025.25%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

FundInitial BalanceFinal BalanceCAGR
IWR$10,000$15,23414.15%
XLC$10,000$16,64529.04%

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.


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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) 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!

3) 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!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

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

Leave a Reply

Your email address will not be published.