IWR vs. XLI: What’s The Difference?

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

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

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

Summary

IWR XLI
Name iShares Russell Mid-Cap ETF Industrial Select Sector SPDR Fund
Category Mid-Cap Blend Industrials
Issuer iShares SPDR State Street Global Advisors
AUM 29.84B 19.33B
Avg. Return 14.15% 14.44%
Div. Yield 0.99% 1.25%
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 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%.

IWR’s dividend yield is 0.26% lower than that of XLI (0.99% vs. 1.25%). Also, IWR yielded on average 0.29% less per year over the past decade (14.15% vs. 14.44%). The expense ratio of IWR is 0.07 percentage points higher than XLI’s (0.19% vs. 0.12%).

Fund Composition

Industry Exposure

IWR vs. XLI - Industry Exposure

IWR XLI
Technology 19.67% 1.82%
Industrials 14.54% 97.49%
Energy 3.48% 0.0%
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% 0.69%
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 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%.

IWR is 17.85% more exposed to the Technology sector than XLI (19.67% vs 1.82%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 82.95% lower and 12.90% higher respectively (14.54% vs. 97.49% and 13.59% vs. 0.69%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 12.38% more of the fund’s holdings compared to XLI (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%.

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%.

Risk Analysis

IWR XLI
Mean Return 1.17 1.14
R-squared 91.52 78.97
Std. Deviation 15.66 17.13
Alpha -2.8 2.38
Beta 1.11 1.08
Sharpe Ratio 0.86 0.76
Treynor Ratio 11.72 11.34

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

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

IWR’s Mean Return is 0.03 points higher than that of XLI and its R-squared is 12.55 points higher. With a Standard Deviation of 15.66, IWR is slightly less volatile than XLI. The Alpha and Beta of IWR are 5.18 points lower and 0.03 points higher than XLI’s Alpha and Beta.

Performance

Annual Returns

IWR vs. XLI - Annual Returns

Year IWR XLI
2020 16.91% 11.0%
2019 30.31% 29.11%
2018 -9.13% -13.1%
2017 18.32% 23.85%
2016 13.58% 19.93%
2015 -2.57% -4.27%
2014 13.03% 10.44%
2013 34.5% 40.44%
2012 17.13% 14.86%
2011 -1.67% -1.01%
2010 25.25% 27.62%

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 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

IWR vs. XLI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
XLI $10,000 $39,853 14.44%

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 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%.

IWR’s CAGR is 0.29 percentage points lower than that of XLI and as a result, would have yielded $102 less on a $10,000 investment. Thus, IWR performed worse than XLI by 0.29% annually.


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