MTUM vs. XLC: What’s The Difference?

The iShares MSCI USA Momentum Factor ETF (MTUM) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. MTUM is a iShares Large Growth fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between MTUM and XLC? And which fund is better?

The expense ratio of MTUM is 0.03 percentage points higher than XLC’s (0.15% vs. 0.12%). MTUM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, MTUM has provided lower returns than XLC over the past 2 years.

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

Summary

MTUM XLC
Name iShares MSCI USA Momentum Factor ETF Communication Services Select Sector SPDR Fund
Category Large Growth Communications
Issuer iShares SPDR State Street Global Advisors
AUM 14.53B 14.09B
Avg. Return 17.37% 29.04%
Div. Yield 0.44% 0.62%
Expense Ratio 0.15% 0.12%

The iShares MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

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%.

MTUM’s dividend yield is 0.18% lower than that of XLC (0.44% vs. 0.62%). Also, MTUM yielded on average 11.67% less per year over the past decade (17.37% vs. 29.04%). The expense ratio of MTUM is 0.03 percentage points higher than XLC’s (0.15% vs. 0.12%).

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Fund Composition

Industry Exposure

MTUM vs. XLC - Industry Exposure

MTUM XLC
Technology 15.24% 0.0%
Industrials 12.47% 0.0%
Energy 1.77% 0.0%
Communication Services 13.18% 100.0%
Utilities 0.19% 0.0%
Healthcare 6.41% 0.0%
Consumer Defensive 2.88% 0.0%
Real Estate 0.43% 0.0%
Financial Services 34.32% 0.0%
Consumer Cyclical 9.96% 0.0%
Basic Materials 3.15% 0.0%

The iShares MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

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%.

MTUM is 34.32% more exposed to the Financial Services sector than XLC (34.32% vs 0.0%). MTUM’s exposure to Technology and Communication Services stocks is 15.24% higher and 86.82% lower respectively (15.24% vs. 0.0% and 13.18% vs. 100.0%). In total, Real Estate, Energy, and Consumer Defensive also make up 5.08% more of the fund’s holdings compared to XLC (5.08% vs. 0.00%).

Holdings

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

XLC - Holdings

XLC Holdings Weight
Facebook Inc A 23.75%
Alphabet Inc A 11.49%
Alphabet Inc Class C 11.16%
Netflix Inc 4.78%
Charter Communications Inc A 4.65%
Comcast Corp Class A 4.44%
T-Mobile US Inc 4.41%
The Walt Disney Co 4.39%
AT&T Inc 4.35%
Verizon Communications Inc 4.33%

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%.

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Risk Analysis

MTUM XLC
Mean Return 0 0
R-squared 0 0
Std. Deviation 0 0
Alpha 0 0
Beta 0 0
Sharpe Ratio 0 0
Treynor Ratio 0 0

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Alpha of 0 with a Treynor Ratio of 0 and a R-squared of 0. Its Beta is 0 while MTUM’s Mean Return is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.

The Communication Services Select Sector SPDR Fund (XLC) has a Sharpe Ratio of 0 with a Beta of 0 and a Mean Return of 0. Its Standard Deviation is 0 while XLC’s Treynor Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Alpha of 0.

MTUM’s Mean Return is 0.00 points lower than that of XLC and its R-squared is 0.00 points lower. With a Standard Deviation of 0, MTUM is slightly less volatile than XLC. The Alpha and Beta of MTUM are 0.00 points lower and 0.00 points lower than XLC’s Alpha and Beta.

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Performance

Annual Returns

MTUM vs. XLC - Annual Returns

Year MTUM XLC
2020 29.69% 26.85%
2019 27.57% 31.22%
2018 -1.77% 0.0%
2017 37.6% 0.0%
2016 4.89% 0.0%
2015 9.12% 0.0%
2014 14.48% 0.0%
2013 0.0% 0.0%
2012 0.0% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

MTUM had its best year in 2017 with an annual return of 37.6%. MTUM’s worst year over the past decade yielded -1.77% and occurred in 2018. In most years the iShares MSCI USA Momentum Factor ETF provided moderate returns such as in 2010, 2016, and 2015 where annual returns amounted to 0.0%, 4.89%, and 9.12% 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

MTUM vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MTUM $10,000 $16,544 17.37%
XLC $10,000 $16,645 29.04%

A $10,000 investment in MTUM would have resulted in a final balance of $16,544. This is a profit of $6,544 over 2 years and amounts to a compound annual growth rate (CAGR) of 17.37%.

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%.

MTUM’s CAGR is 11.67 percentage points lower than that of XLC and as a result, would have yielded $101 less on a $10,000 investment. Thus, MTUM performed worse than XLC by 11.67% annually.


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