The iShares Russell Mid-Cap ETF (IWR) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between IWR and XLY? And which fund is better?
The expense ratio of IWR is 0.07 percentage points higher than XLY’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 XLY over the past ten years.
In this article, we’ll compare IWR vs. XLY. We’ll look at annual returns and risk metrics, as well as at their industry exposure and performance. Moreover, I’ll also discuss IWR’s and XLY’s fund composition, holdings, and portfolio growth and examine how these affect their overall returns.
Summary
| IWR | XLY | |
| Name | iShares Russell Mid-Cap ETF | Consumer Discretionary Select Sector SPDR Fund |
| Category | Mid-Cap Blend | Consumer Cyclical |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 29.84B | 20.21B |
| Avg. Return | 14.15% | 18.86% |
| Div. Yield | 0.99% | 0.63% |
| 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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.
IWR’s dividend yield is 0.36% higher than that of XLY (0.99% vs. 0.63%). Also, IWR yielded on average 4.71% less per year over the past decade (14.15% vs. 18.86%). The expense ratio of IWR is 0.07 percentage points higher than XLY’s (0.19% vs. 0.12%).
Fund Composition
Industry Exposure
| IWR | XLY | |
| Technology | 19.67% | 0.57% |
| Industrials | 14.54% | 0.0% |
| 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% | 5.34% |
| Real Estate | 8.31% | 0.0% |
| Financial Services | 11.64% | 0.0% |
| Consumer Cyclical | 13.59% | 94.1% |
| 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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.
XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.
IWR is 19.10% more exposed to the Technology sector than XLY (19.67% vs 0.57%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 14.54% higher and 80.51% lower respectively (14.54% vs. 0.0% and 13.59% vs. 94.1%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 7.04% more of the fund’s holdings compared to XLY (12.38% vs. 5.34%).
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%.
| XLY Holdings | Weight |
| Amazon.com Inc | 22.9% |
| Tesla Inc | 13.5% |
| The Home Depot Inc | 8.74% |
| McDonald’s Corp | 4.5% |
| Nike Inc B | 4.45% |
| Lowe’s Companies Inc | 3.58% |
| Starbucks Corp | 3.44% |
| Target Corp | 3.12% |
| Booking Holdings Inc | 2.35% |
| TJX Companies Inc | 2.12% |
XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.
Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.
Risk Analysis
| IWR | XLY | |
| Mean Return | 1.17 | 1.47 |
| R-squared | 91.52 | 80.84 |
| Std. Deviation | 15.66 | 15.97 |
| Alpha | -2.8 | 6.96 |
| Beta | 1.11 | 1.02 |
| Sharpe Ratio | 0.86 | 1.06 |
| Treynor Ratio | 11.72 | 16.69 |
The iShares Russell Mid-Cap ETF (IWR) has a Sharpe Ratio of 0.86 with a Alpha of -2.8 and a R-squared of 91.52. Its Standard Deviation is 15.66 while IWR’s Treynor Ratio is 11.72. Furthermore, the fund has a Mean Return of 1.17 and a Beta of 1.11.
The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Sharpe Ratio of 1.06 with a Treynor Ratio of 16.69 and a Standard Deviation of 15.97. Its Mean Return is 1.47 while XLY’s Alpha is 6.96. Furthermore, the fund has a R-squared of 80.84 and a Beta of 1.02.
IWR’s Mean Return is 0.30 points lower than that of XLY and its R-squared is 10.68 points higher. With a Standard Deviation of 15.66, IWR is slightly less volatile than XLY. The Alpha and Beta of IWR are 9.76 points lower and 0.09 points higher than XLY’s Alpha and Beta.
Performance
Annual Returns
| Year | IWR | XLY |
| 2020 | 16.91% | 29.66% |
| 2019 | 30.31% | 28.43% |
| 2018 | -9.13% | 1.66% |
| 2017 | 18.32% | 22.77% |
| 2016 | 13.58% | 5.87% |
| 2015 | -2.57% | 9.93% |
| 2014 | 13.03% | 9.49% |
| 2013 | 34.5% | 42.74% |
| 2012 | 17.13% | 23.6% |
| 2011 | -1.67% | 5.98% |
| 2010 | 25.25% | 27.36% |
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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWR | $10,000 | $39,751 | 14.15% |
| XLY | $10,000 | $63,066 | 18.86% |
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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.
IWR’s CAGR is 4.71 percentage points lower than that of XLY and as a result, would have yielded $23,315 less on a $10,000 investment. Thus, IWR performed worse than XLY by 4.71% annually.
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