The iShares Russell Mid-Cap ETF (IWR) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between IWR and XLE? And which fund is better?
The expense ratio of IWR is 0.07 percentage points higher than XLE’s (0.19% vs. 0.12%). IWR also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWR has provided higher returns than XLE over the past ten years.
In this article, we’ll compare IWR vs. XLE. We’ll look at portfolio growth and industry exposure, as well as at their holdings and fund composition. Moreover, I’ll also discuss IWR’s and XLE’s risk metrics, performance, and annual returns and examine how these affect their overall returns.
Summary
| IWR | XLE | |
| Name | iShares Russell Mid-Cap ETF | Energy Select Sector SPDR Fund |
| Category | Mid-Cap Blend | Equity Energy |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 29.84B | 25.55B |
| Avg. Return | 14.15% | 1.28% |
| Div. Yield | 0.99% | 3.92% |
| 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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.
IWR’s dividend yield is 2.93% lower than that of XLE (0.99% vs. 3.92%). Also, IWR yielded on average 12.87% more per year over the past decade (14.15% vs. 1.28%). The expense ratio of IWR is 0.07 percentage points higher than XLE’s (0.19% vs. 0.12%).
Fund Composition
Industry Exposure
| IWR | XLE | |
| Technology | 19.67% | 0.0% |
| Industrials | 14.54% | 0.0% |
| Energy | 3.48% | 100.0% |
| Communication Services | 4.64% | 0.0% |
| 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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.
XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (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 XLE (12.38% vs. 0.00%).
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%.
| XLE Holdings | Weight |
| Exxon Mobil Corp | 23.7% |
| Chevron Corp | 20.03% |
| ConocoPhillips | 4.64% |
| EOG Resources Inc | 4.46% |
| Schlumberger Ltd | 4.43% |
| Marathon Petroleum Corp | 4.17% |
| Pioneer Natural Resources Co | 4.08% |
| Phillips 66 | 4.07% |
| Kinder Morgan Inc Class P | 3.85% |
| Williams Companies Inc | 3.5% |
XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.
Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.
Risk Analysis
| IWR | XLE | |
| Mean Return | 1.17 | 0.32 |
| R-squared | 91.52 | 61.84 |
| Std. Deviation | 15.66 | 27.52 |
| Alpha | -2.8 | -11.98 |
| Beta | 1.11 | 1.54 |
| Sharpe Ratio | 0.86 | 0.12 |
| Treynor Ratio | 11.72 | -0.4 |
The iShares Russell Mid-Cap ETF (IWR) has a Beta of 1.11 with a Mean Return of 1.17 and a Sharpe Ratio of 0.86. Its R-squared is 91.52 while IWR’s Standard Deviation is 15.66. Furthermore, the fund has a Treynor Ratio of 11.72 and a Alpha of -2.8.
The Energy Select Sector SPDR Fund (XLE) has a Treynor Ratio of -0.4 with a Standard Deviation of 27.52 and a Alpha of -11.98. Its Beta is 1.54 while XLE’s R-squared is 61.84. Furthermore, the fund has a Mean Return of 0.32 and a Sharpe Ratio of 0.12.
IWR’s Mean Return is 0.85 points higher than that of XLE and its R-squared is 29.68 points higher. With a Standard Deviation of 15.66, IWR is slightly less volatile than XLE. The Alpha and Beta of IWR are 9.18 points higher and 0.43 points lower than XLE’s Alpha and Beta.
Performance
Annual Returns
| Year | IWR | XLE |
| 2020 | 16.91% | -32.56% |
| 2019 | 30.31% | 11.87% |
| 2018 | -9.13% | -18.1% |
| 2017 | 18.32% | -1.01% |
| 2016 | 13.58% | 27.95% |
| 2015 | -2.57% | -21.47% |
| 2014 | 13.03% | -8.61% |
| 2013 | 34.5% | 26.16% |
| 2012 | 17.13% | 5.17% |
| 2011 | -1.67% | 2.98% |
| 2010 | 25.25% | 21.7% |
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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWR | $10,000 | $39,751 | 14.15% |
| XLE | $10,000 | $9,339 | 1.28% |
A $10,000 investment in IWR would have resulted in a final balance of $39,751. This is a profit of $29,751 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.15%.
With a $10,000 investment in XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.
IWR’s CAGR is 12.87 percentage points higher than that of XLE and as a result, would have yielded $30,412 more on a $10,000 investment. Thus, IWR outperformed XLE by 12.87% annually.
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