IWR vs. XLV: What’s The Difference?

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

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

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

Summary

IWR XLV
Name iShares Russell Mid-Cap ETF Health Care Select Sector SPDR Fund
Category Mid-Cap Blend Health
Issuer iShares SPDR State Street Global Advisors
AUM 29.84B 27.88B
Avg. Return 14.15% 15.02%
Div. Yield 0.99% 1.4%
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 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%.

IWR’s dividend yield is 0.41% lower than that of XLV (0.99% vs. 1.4%). Also, IWR yielded on average 0.87% less per year over the past decade (14.15% vs. 15.02%). The expense ratio of IWR is 0.07 percentage points higher than XLV’s (0.19% vs. 0.12%).

Fund Composition

Industry Exposure

IWR vs. XLV - Industry Exposure

IWR XLV
Technology 19.67% 0.0%
Industrials 14.54% 0.0%
Energy 3.48% 0.0%
Communication Services 4.64% 0.0%
Utilities 4.46% 0.0%
Healthcare 11.76% 100.0%
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 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%.

IWR is 19.67% more exposed to the Technology sector than XLV (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 XLV (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%.

XLV - Holdings

XLV Holdings Weight
Johnson & Johnson 9.19%
UnitedHealth Group Inc 8.01%
Pfizer Inc 4.64%
Abbott Laboratories 4.36%
AbbVie Inc 4.21%
Thermo Fisher Scientific Inc 4.2%
Merck & Co Inc 4.17%
Eli Lilly and Co 3.87%
Danaher Corp 3.61%
Medtronic PLC 3.54%

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%.

Risk Analysis

IWR XLV
Mean Return 1.17 1.27
R-squared 91.52 58.19
Std. Deviation 15.66 12.94
Alpha -2.8 7.75
Beta 1.11 0.7
Sharpe Ratio 0.86 1.13
Treynor Ratio 11.72 21.1

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

The Health Care Select Sector SPDR Fund (XLV) has a Treynor Ratio of 21.1 with a Alpha of 7.75 and a R-squared of 58.19. Its Standard Deviation is 12.94 while XLV’s Sharpe Ratio is 1.13. Furthermore, the fund has a Beta of 0.7 and a Mean Return of 1.27.

IWR’s Mean Return is 0.10 points lower than that of XLV and its R-squared is 33.33 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than XLV. The Alpha and Beta of IWR are 10.55 points lower and 0.41 points higher than XLV’s Alpha and Beta.

Performance

Annual Returns

IWR vs. XLV - Annual Returns

Year IWR XLV
2020 16.91% 13.33%
2019 30.31% 20.63%
2018 -9.13% 6.3%
2017 18.32% 21.7%
2016 13.58% -2.83%
2015 -2.57% 6.82%
2014 13.03% 25.17%
2013 34.5% 41.24%
2012 17.13% 17.56%
2011 -1.67% 12.44%
2010 25.25% 2.91%

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 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.

Portfolio Growth

IWR vs. XLV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
XLV $10,000 $44,147 15.02%

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 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%.

IWR’s CAGR is 0.87 percentage points lower than that of XLV and as a result, would have yielded $4,396 less on a $10,000 investment. Thus, IWR performed worse than XLV by 0.87% annually.


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