The iShares MSCI USA Min Vol Factor ETF (USMV) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between USMV and XLC? And which fund is better?
The expense ratio of USMV is 0.03 percentage points higher than XLC’s (0.15% vs. 0.12%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare USMV vs. XLC. We’ll look at holdings and annual returns, as well as at their performance and fund composition. Moreover, I’ll also discuss USMV’s and XLC’s risk metrics, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||iShares MSCI USA Min Vol Factor ETF||Communication Services Select Sector SPDR Fund|
|Issuer||iShares||SPDR State Street Global Advisors|
The iShares MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% 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%.
USMV’s dividend yield is 0.88% higher than that of XLC (1.5% vs. 0.62%). Also, USMV yielded on average 15.14% less per year over the past decade (13.89% vs. 29.04%). The expense ratio of USMV is 0.03 percentage points higher than XLC’s (0.15% vs. 0.12%).
The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.
USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.
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%.
USMV is 20.53% more exposed to the Technology sector than XLC (20.53% vs 0.0%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 18.42% higher and 12.82% higher respectively (18.42% vs. 0.0% and 12.82% vs. 0.0%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 9.91% more of the fund’s holdings compared to XLC (9.91% vs. 0.00%).
|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management Inc||1.45%|
|The Kroger Co||1.44%|
|Johnson & Johnson||1.42%|
|Gilead Sciences Inc||1.42%|
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
|Facebook Inc A||23.75%|
|Alphabet Inc A||11.49%|
|Alphabet Inc Class C||11.16%|
|Charter Communications Inc A||4.65%|
|Comcast Corp Class A||4.44%|
|T-Mobile US Inc||4.41%|
|The Walt Disney Co||4.39%|
|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%.
The iShares MSCI USA Min Vol Factor ETF (USMV) has a R-squared of 0 with a Alpha of 0 and a Sharpe Ratio of 0. Its Standard Deviation is 0 while USMV’s Beta is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Mean Return of 0.
The Communication Services Select Sector SPDR Fund (XLC) has a Alpha of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Sharpe Ratio is 0 while XLC’s Treynor Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Beta of 0.
USMV’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, USMV is slightly less volatile than XLC. The Alpha and Beta of USMV are 0.00 points lower and 0.00 points lower than XLC’s Alpha and Beta.
USMV had its best year in 2019 with an annual return of 27.77%. USMV’s worst year over the past decade yielded 0.0% and occurred in 2011. In most years the iShares MSCI USA Min Vol Factor ETF provided moderate returns such as in 2020, 2016, and 2012 where annual returns amounted to 5.6%, 10.5%, and 11.04% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in USMV would have resulted in a final balance of $13,492. This is a profit of $3,492 over 2 years and amounts to a compound annual growth rate (CAGR) of 13.89%.
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%.
USMV’s CAGR is 15.14 percentage points lower than that of XLC and as a result, would have yielded $3,153 less on a $10,000 investment. Thus, USMV performed worse than XLC by 15.14% annually.
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