The Energy Select Sector SPDR Fund (XLE) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between XLE and EFV? And which fund is better?
The expense ratio of XLE is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than EFV over the past 11 years.
In this article, we’ll compare XLE vs. EFV. We’ll look at risk metrics and portfolio growth, as well as at their holdings and annual returns. Moreover, I’ll also discuss XLE’s and EFV’s fund composition, industry exposure, and performance and examine how these affect their overall returns.
Summary
| XLE | EFV | |
| Name | Energy Select Sector SPDR Fund | iShares MSCI EAFE Value ETF |
| Category | Equity Energy | Foreign Large Value |
| Issuer | SPDR State Street Global Advisors | iShares |
| AUM | 25.55B | 14.37B |
| Avg. Return | 1.28% | 3.99% |
| Div. Yield | 3.92% | 2.94% |
| Expense Ratio | 0.12% | 0.39% |
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 MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
XLE’s dividend yield is 0.98% higher than that of EFV (3.92% vs. 2.94%). Also, XLE yielded on average 2.71% less per year over the past decade (1.28% vs. 3.99%). The expense ratio of XLE is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%).
Fund Composition
Industry Exposure
| XLE | EFV | |
| Technology | 0.0% | 2.98% |
| Industrials | 0.0% | 11.6% |
| Energy | 100.0% | 6.6% |
| Communication Services | 0.0% | 6.46% |
| Utilities | 0.0% | 6.14% |
| Healthcare | 0.0% | 9.19% |
| Consumer Defensive | 0.0% | 6.82% |
| Real Estate | 0.0% | 5.06% |
| Financial Services | 0.0% | 26.55% |
| Consumer Cyclical | 0.0% | 9.0% |
| Basic Materials | 0.0% | 9.59% |
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 MSCI EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.
EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.
XLE is 93.40% more exposed to the Energy sector than EFV (100.0% vs 6.6%). XLE’s exposure to Technology and Industrials stocks is 2.98% lower and 11.60% lower respectively (0.0% vs. 2.98% and 0.0% vs. 11.6%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 40.61% less of the fund’s holdings compared to EFV (0.00% vs. 40.61%).
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%.
| EFV Holdings | Weight |
| Novartis AG | 2.41% |
| Toyota Motor Corp | 2.21% |
| Commonwealth Bank of Australia | 1.59% |
| Siemens AG | 1.45% |
| Sanofi SA | 1.42% |
| HSBC Holdings PLC | 1.4% |
| TotalEnergies SE | 1.35% |
| Allianz SE | 1.23% |
| GlaxoSmithKline PLC | 1.18% |
| Rio Tinto PLC | 1.1% |
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
Risk Analysis
| XLE | EFV | |
| Mean Return | 0.32 | 0.42 |
| R-squared | 61.84 | 92.15 |
| Std. Deviation | 27.52 | 16.53 |
| Alpha | -11.98 | -1.77 |
| Beta | 1.54 | 1.05 |
| Sharpe Ratio | 0.12 | 0.26 |
| Treynor Ratio | -0.4 | 2.92 |
The Energy Select Sector SPDR Fund (XLE) has a Sharpe Ratio of 0.12 with a Beta of 1.54 and a Mean Return of 0.32. Its Alpha is -11.98 while XLE’s Treynor Ratio is -0.4. Furthermore, the fund has a Standard Deviation of 27.52 and a R-squared of 61.84.
The iShares MSCI EAFE Value ETF (EFV) has a R-squared of 92.15 with a Treynor Ratio of 2.92 and a Beta of 1.05. Its Alpha is -1.77 while EFV’s Mean Return is 0.42. Furthermore, the fund has a Standard Deviation of 16.53 and a Sharpe Ratio of 0.26.
XLE’s Mean Return is 0.10 points lower than that of EFV and its R-squared is 30.31 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than EFV. The Alpha and Beta of XLE are 10.21 points lower and 0.49 points higher than EFV’s Alpha and Beta.
Performance
Annual Returns
| Year | XLE | EFV |
| 2020 | -32.56% | -2.78% |
| 2019 | 11.87% | 15.97% |
| 2018 | -18.1% | -14.88% |
| 2017 | -1.01% | 21.22% |
| 2016 | 27.95% | 4.87% |
| 2015 | -21.47% | -5.89% |
| 2014 | -8.61% | -5.65% |
| 2013 | 26.16% | 22.61% |
| 2012 | 5.17% | 17.52% |
| 2011 | 2.98% | -12.24% |
| 2010 | 21.7% | 3.18% |
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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLE | $10,000 | $9,339 | 1.28% |
| EFV | $10,000 | $14,134 | 3.99% |
A $10,000 investment in XLE would have resulted in a final balance of $9,339. This is a profit of $-661 over 11 years and amounts to a compound annual growth rate (CAGR) of 1.28%.
With a $10,000 investment in EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
XLE’s CAGR is 2.71 percentage points lower than that of EFV and as a result, would have yielded $4,795 less on a $10,000 investment. Thus, XLE performed worse than EFV by 2.71% annually.
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