The Energy Select Sector SPDR Fund (XLE) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and DGRO is a iShares Large Value fund. So, what’s the difference between XLE and DGRO? And which fund is better?
The expense ratio of XLE is 0.04 percentage points higher than DGRO’s (0.12% vs. 0.08%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than DGRO over the past 6 years.
In this article, we’ll compare XLE vs. DGRO. We’ll look at portfolio growth and performance, as well as at their risk metrics and holdings. Moreover, I’ll also discuss XLE’s and DGRO’s fund composition, annual returns, and industry exposure and examine how these affect their overall returns.
Summary
| XLE | DGRO | |
| Name | Energy Select Sector SPDR Fund | iShares Core Dividend Growth ETF |
| Category | Equity Energy | Large Value |
| Issuer | SPDR State Street Global Advisors | iShares |
| AUM | 25.55B | 20B |
| Avg. Return | 1.28% | 12.46% |
| Div. Yield | 3.92% | 2.04% |
| Expense Ratio | 0.12% | 0.08% |
The Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.
The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.
XLE’s dividend yield is 1.88% higher than that of DGRO (3.92% vs. 2.04%). Also, XLE yielded on average 11.18% less per year over the past decade (1.28% vs. 12.46%). The expense ratio of XLE is 0.04 percentage points higher than DGRO’s (0.12% vs. 0.08%).
Fund Composition
Industry Exposure
| XLE | DGRO | |
| Technology | 0.0% | 18.98% |
| Industrials | 0.0% | 12.52% |
| Energy | 100.0% | 0.11% |
| Communication Services | 0.0% | 4.53% |
| Utilities | 0.0% | 7.34% |
| Healthcare | 0.0% | 17.55% |
| Consumer Defensive | 0.0% | 10.24% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 0.0% | 18.47% |
| Consumer Cyclical | 0.0% | 7.42% |
| Basic Materials | 0.0% | 2.83% |
The Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.
XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.
DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.
XLE is 99.89% more exposed to the Energy sector than DGRO (100.0% vs 0.11%). XLE’s exposure to Technology and Industrials stocks is 18.98% lower and 12.52% lower respectively (0.0% vs. 18.98% and 0.0% vs. 12.52%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 25.89% less of the fund’s holdings compared to DGRO (0.00% vs. 25.89%).
Holdings
| XLE Holdings | Weight |
| Exxon Mobil Corp | 23.7% |
| Chevron Corp | 20.03% |
| ConocoPhillips | 4.64% |
| EOG Resources Inc | 4.46% |
| Schlumberger Ltd | 4.43% |
| Marathon Petroleum Corp | 4.17% |
| Pioneer Natural Resources Co | 4.08% |
| Phillips 66 | 4.07% |
| Kinder Morgan Inc Class P | 3.85% |
| Williams Companies Inc | 3.5% |
XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.
Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.
| DGRO Holdings | Weight |
| Microsoft Corp | 3.29% |
| Apple Inc | 3.26% |
| Pfizer Inc | 2.89% |
| Johnson & Johnson | 2.87% |
| Procter & Gamble Co | 2.79% |
| Verizon Communications Inc | 2.68% |
| JPMorgan Chase & Co | 2.57% |
| The Home Depot Inc | 2.35% |
| Merck & Co Inc | 2.11% |
| Cisco Systems Inc | 1.98% |
DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.
Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.
Risk Analysis
| XLE | DGRO | |
| Mean Return | 0.32 | 0 |
| R-squared | 61.84 | 0 |
| Std. Deviation | 27.52 | 0 |
| Alpha | -11.98 | 0 |
| Beta | 1.54 | 0 |
| Sharpe Ratio | 0.12 | 0 |
| Treynor Ratio | -0.4 | 0 |
The Energy Select Sector SPDR Fund (XLE) has a Alpha of -11.98 with a Standard Deviation of 27.52 and a R-squared of 61.84. Its Sharpe Ratio is 0.12 while XLE’s Treynor Ratio is -0.4. Furthermore, the fund has a Beta of 1.54 and a Mean Return of 0.32.
The iShares Core Dividend Growth ETF (DGRO) has a R-squared of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Alpha is 0 while DGRO’s Standard Deviation is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.
XLE’s Mean Return is 0.32 points higher than that of DGRO and its R-squared is 61.84 points higher. With a Standard Deviation of 27.52, XLE is slightly more volatile than DGRO. The Alpha and Beta of XLE are 11.98 points lower and 1.54 points higher than DGRO’s Alpha and Beta.
Performance
Annual Returns
| Year | XLE | DGRO |
| 2020 | -32.56% | 9.47% |
| 2019 | 11.87% | 30.02% |
| 2018 | -18.1% | -2.24% |
| 2017 | -1.01% | 22.84% |
| 2016 | 27.95% | 15.27% |
| 2015 | -21.47% | -0.62% |
| 2014 | -8.61% | 0.0% |
| 2013 | 26.16% | 0.0% |
| 2012 | 5.17% | 0.0% |
| 2011 | 2.98% | 0.0% |
| 2010 | 21.7% | 0.0% |
XLE had its best year in 2016 with an annual return of 27.95%. XLE’s worst year over the past decade yielded -32.56% and occurred in 2020. In most years the Energy Select Sector SPDR Fund provided moderate returns such as in 2017, 2011, and 2012 where annual returns amounted to -1.01%, 2.98%, and 5.17% respectively.
The year 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLE | $10,000 | $6,145 | 1.28% |
| DGRO | $10,000 | $19,580 | 12.46% |
A $10,000 investment in XLE would have resulted in a final balance of $6,145. This is a profit of $-3,855 over 6 years and amounts to a compound annual growth rate (CAGR) of 1.28%.
With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.
XLE’s CAGR is 11.18 percentage points lower than that of DGRO and as a result, would have yielded $13,435 less on a $10,000 investment. Thus, XLE performed worse than DGRO by 11.18% annually.
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