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MUB vs. XLC: What’s The Difference?

The iShares National Muni Bond ETF (MUB) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between MUB and XLC? And which fund is better?

The expense ratio of MUB is 0.05 percentage points lower than XLC’s (0.07% vs. 0.12%). MUB is mostly comprised of AA bonds while XLC has a high exposure to the communication services sector. Overall, MUB has provided lower returns than XLC over the past 2 years.

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

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Summary

MUBXLC
NameiShares National Muni Bond ETFCommunication Services Select Sector SPDR Fund
CategoryMuni National IntermCommunications
IssueriSharesSPDR State Street Global Advisors
AUM22.71B14.09B
Avg. Return4.04%29.04%
Div. Yield1.96%0.62%
Expense Ratio0.07%0.12%

The iShares National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.

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%.

MUB’s dividend yield is 1.34% higher than that of XLC (1.96% vs. 0.62%). Also, MUB yielded on average 25.00% less per year over the past decade (4.04% vs. 29.04%). The expense ratio of MUB is 0.05 percentage points lower than XLC’s (0.07% vs. 0.12%).

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Fund Composition

Holdings

MUB - Holdings

MUB Bond SectorsWeight
AA60.38%
AAA18.39%
A15.04%
BBB6.0%
Others0.17%
BB0.02%
Below B0.0%
B0.0%
US Government0.0%

MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.

XLC - Holdings

XLC HoldingsWeight
Facebook Inc A23.75%
Alphabet Inc A11.49%
Alphabet Inc Class C11.16%
Netflix Inc4.78%
Charter Communications Inc A4.65%
Comcast Corp Class A4.44%
T-Mobile US Inc4.41%
The Walt Disney Co4.39%
AT&T Inc4.35%
Verizon Communications Inc4.33%

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

MUBXLC
Mean Return0.320
R-squared990
Std. Deviation3.680
Alpha-0.460
Beta1.010
Sharpe Ratio0.880
Treynor Ratio3.20

The iShares National Muni Bond ETF (MUB) has a Alpha of -0.46 with a Standard Deviation of 3.68 and a Beta of 1.01. Its Treynor Ratio is 3.2 while MUB’s Sharpe Ratio is 0.88. Furthermore, the fund has a Mean Return of 0.32 and a R-squared of 99.

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

MUB’s Mean Return is 0.32 points higher than that of XLC and its R-squared is 99.00 points higher. With a Standard Deviation of 3.68, MUB is slightly more volatile than XLC. The Alpha and Beta of MUB are 0.46 points lower and 1.01 points higher than XLC’s Alpha and Beta.

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Performance

Annual Returns

MUB vs. XLC - Annual Returns

YearMUBXLC
20204.87%26.85%
20197.28%31.22%
20180.86%0.0%
20174.61%0.0%
20160.06%0.0%
20152.99%0.0%
20148.61%0.0%
2013-3.26%0.0%
20126.14%0.0%
201110.85%0.0%
20101.4%0.0%

MUB had its best year in 2011 with an annual return of 10.85%. MUB’s worst year over the past decade yielded -3.26% and occurred in 2013. In most years the iShares National Muni Bond ETF provided moderate returns such as in 2015, 2017, and 2020 where annual returns amounted to 2.99%, 4.61%, and 4.87% 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

MUB vs. XLC - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MUB$10,000$11,2504.04%
XLC$10,000$16,64529.04%

A $10,000 investment in MUB would have resulted in a final balance of $11,250. This is a profit of $1,250 over 2 years and amounts to a compound annual growth rate (CAGR) of 4.04%.

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%.

MUB’s CAGR is 25.00 percentage points lower than that of XLC and as a result, would have yielded $5,395 less on a $10,000 investment. Thus, MUB performed worse than XLC by 25.00% annually.


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