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XLC vs. IWS: What’s The Difference?

The Communication Services Select Sector SPDR Fund (XLC) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. XLC is a SPDR State Street Global Advisors Communications fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between XLC and IWS? And which fund is better?

The expense ratio of XLC is 0.11 percentage points lower than IWS’s (0.12% vs. 0.23%). XLC also has a higher exposure to the communication services sector and a lower standard deviation. Overall, XLC has provided higher returns than IWS over the past 2 years.

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

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Summary

XLCIWS
NameCommunication Services Select Sector SPDR FundiShares Russell Mid-Cap Value ETF
CategoryCommunicationsMid-Cap Value
IssuerSPDR State Street Global AdvisorsiShares
AUM14.09B14.24B
Avg. Return29.04%12.35%
Div. Yield0.62%1.34%
Expense Ratio0.12%0.23%

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%.

The iShares Russell Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

XLC’s dividend yield is 0.72% lower than that of IWS (0.62% vs. 1.34%). Also, XLC yielded on average 16.69% more per year over the past decade (29.04% vs. 12.35%). The expense ratio of XLC is 0.11 percentage points lower than IWS’s (0.12% vs. 0.23%).

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Fund Composition

Industry Exposure

XLC vs. IWS - Industry Exposure

XLCIWS
Technology0.0%11.39%
Industrials0.0%14.6%
Energy0.0%4.71%
Communication Services100.0%4.08%
Utilities0.0%6.97%
Healthcare0.0%8.56%
Consumer Defensive0.0%4.76%
Real Estate0.0%11.71%
Financial Services0.0%15.75%
Consumer Cyclical0.0%12.07%
Basic Materials0.0%5.4%

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%.

The iShares Russell Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

XLC is 95.92% more exposed to the Communication Services sector than IWS (100.0% vs 4.08%). XLC’s exposure to Technology and Industrials stocks is 11.39% lower and 14.60% lower respectively (0.0% vs. 11.39% and 0.0% vs. 14.6%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 39.53% less of the fund’s holdings compared to IWS (0.00% vs. 39.53%).

Holdings

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

XLCIWS
Mean Return01.06
R-squared087.04
Std. Deviation016.03
Alpha0-4.11
Beta01.1
Sharpe Ratio00.75
Treynor Ratio010.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Alpha of -4.11 with a Mean Return of 1.06 and a Beta of 1.1. Its Treynor Ratio is 10.3 while IWS’s Standard Deviation is 16.03. Furthermore, the fund has a Sharpe Ratio of 0.75 and a R-squared of 87.04.

XLC’s Mean Return is 1.06 points lower than that of IWS and its R-squared is 87.04 points lower. With a Standard Deviation of 0, XLC is slightly less volatile than IWS. The Alpha and Beta of XLC are 4.11 points higher and 1.10 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

XLC vs. IWS - Annual Returns

YearXLCIWS
202026.85%4.76%
201931.22%26.78%
20180.0%-12.36%
20170.0%13.1%
20160.0%19.69%
20150.0%-4.93%
20140.0%14.49%
20130.0%33.11%
20120.0%18.27%
20110.0%-1.55%
20100.0%24.46%

XLC had its best year in 2019 with an annual return of 31.22%. XLC’s worst year over the past decade yielded 0.0% and occurred in 2018. In most years the Communication Services Select Sector SPDR Fund provided moderate returns such as in 2014, 2013, and 2012 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.

The year 2013 was the strongest year for IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

XLC vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLC$10,000$16,64529.04%
IWS$10,000$13,28112.35%

A $10,000 investment in XLC would have resulted in a final balance of $16,645. This is a profit of $6,645 over 2 years and amounts to a compound annual growth rate (CAGR) of 29.04%.

With a $10,000 investment in IWS, the end total would have been $13,281. This equates to a $3,281 profit over 2 years and a compound annual growth rate (CAGR) of 12.35%.

XLC’s CAGR is 16.69 percentage points higher than that of IWS and as a result, would have yielded $3,364 more on a $10,000 investment. Thus, XLC outperformed IWS by 16.69% annually.


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