The Energy Select Sector SPDR Fund (XLE) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and IVE is a iShares Large Value fund. So, what’s the difference between XLE and IVE? And which fund is better?
The expense ratio of XLE is 0.06 percentage points lower than IVE’s (0.12% vs. 0.18%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than IVE over the past 11 years.
In this article, we’ll compare XLE vs. IVE. We’ll look at annual returns and portfolio growth, as well as at their performance and industry exposure. Moreover, I’ll also discuss XLE’s and IVE’s fund composition, risk metrics, and holdings and examine how these affect their overall returns.
|Name||Energy Select Sector SPDR Fund||iShares S&P 500 Value ETF|
|Category||Equity Energy||Large Value|
|Issuer||SPDR State Street Global Advisors||iShares|
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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
XLE’s dividend yield is 2.04% higher than that of IVE (3.92% vs. 1.88%). Also, XLE yielded on average 10.40% less per year over the past decade (1.28% vs. 11.68%). The expense ratio of XLE is 0.06 percentage points lower than IVE’s (0.12% vs. 0.18%).
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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 S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.
IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.
XLE is 94.57% more exposed to the Energy sector than IVE (100.0% vs 5.43%). XLE’s exposure to Technology and Industrials stocks is 9.41% lower and 12.19% lower respectively (0.0% vs. 9.41% and 0.0% vs. 12.19%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 34.12% less of the fund’s holdings compared to IVE (0.00% vs. 34.12%).
|Exxon Mobil Corp||23.7%|
|EOG Resources Inc||4.46%|
|Marathon Petroleum Corp||4.17%|
|Pioneer Natural Resources Co||4.08%|
|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%.
|Berkshire Hathaway Inc Class B||3.05%|
|JPMorgan Chase & Co||2.65%|
|The Walt Disney Co||1.85%|
|Bank of America Corp||1.67%|
|Johnson & Johnson||1.57%|
|Exxon Mobil Corp||1.41%|
|Cisco Systems Inc||1.35%|
|Verizon Communications Inc||1.33%|
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
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The Energy Select Sector SPDR Fund (XLE) has a Sharpe Ratio of 0.12 with a Mean Return of 0.32 and a R-squared of 61.84. Its Beta is 1.54 while XLE’s Standard Deviation is 27.52. Furthermore, the fund has a Alpha of -11.98 and a Treynor Ratio of -0.4.
The iShares S&P 500 Value ETF (IVE) has a Alpha of -2.9 with a Beta of 1.01 and a Mean Return of 1.05. Its Sharpe Ratio is 0.83 while IVE’s Standard Deviation is 14.3. Furthermore, the fund has a Treynor Ratio of 11.41 and a R-squared of 92.08.
XLE’s Mean Return is 0.73 points lower than that of IVE and its R-squared is 30.24 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than IVE. The Alpha and Beta of XLE are 9.08 points lower and 0.53 points higher than IVE’s Alpha and Beta.
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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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.
XLE’s CAGR is 10.40 percentage points lower than that of IVE and as a result, would have yielded $22,011 less on a $10,000 investment. Thus, XLE performed worse than IVE by 10.40% annually.
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