USMV vs. XLC: What’s The Difference?

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.

Summary

USMV XLC
Name iShares MSCI USA Min Vol Factor ETF Communication Services Select Sector SPDR Fund
Category Large Blend Communications
Issuer iShares SPDR State Street Global Advisors
AUM 27.6B 14.09B
Avg. Return 13.89% 29.04%
Div. Yield 1.5% 0.62%
Expense Ratio 0.15% 0.12%

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%).

Fund Composition

Industry Exposure

USMV vs. XLC - Industry Exposure

USMV XLC
Technology 20.53% 0.0%
Industrials 10.51% 0.0%
Energy 0.21% 0.0%
Communication Services 11.03% 100.0%
Utilities 6.93% 0.0%
Healthcare 18.42% 0.0%
Consumer Defensive 12.82% 0.0%
Real Estate 2.73% 0.0%
Financial Services 9.65% 0.0%
Consumer Cyclical 5.53% 0.0%
Basic Materials 1.65% 0.0%

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%).

Holdings

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe 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%.

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%.

Risk Analysis

USMV 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 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.

Performance

Annual Returns

USMV vs. XLC - Annual Returns

Year USMV XLC
2020 5.6% 26.85%
2019 27.77% 31.22%
2018 1.36% 0.0%
2017 18.97% 0.0%
2016 10.5% 0.0%
2015 5.5% 0.0%
2014 16.34% 0.0%
2013 25.11% 0.0%
2012 11.04% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

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.

Portfolio Growth

USMV vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $13,492 13.89%
XLC $10,000 $16,645 29.04%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply