The Energy Select Sector SPDR Fund (XLE) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and IWN is a iShares Small Value fund. So, what’s the difference between XLE and IWN? And which fund is better?
The expense ratio of XLE is 0.12 percentage points lower than IWN’s (0.12% vs. 0.24%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than IWN over the past 11 years.
In this article, we’ll compare XLE vs. IWN. We’ll look at holdings and industry exposure, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss XLE’s and IWN’s risk metrics, performance, and annual returns and examine how these affect their overall returns.
|Name||Energy Select Sector SPDR Fund||iShares Russell 2000 Value ETF|
|Category||Equity Energy||Small 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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
XLE’s dividend yield is 2.66% higher than that of IWN (3.92% vs. 1.26%). Also, XLE yielded on average 9.68% less per year over the past decade (1.28% vs. 10.96%). The expense ratio of XLE is 0.12 percentage points lower than IWN’s (0.12% vs. 0.24%).
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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.
IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.
XLE is 94.16% more exposed to the Energy sector than IWN (100.0% vs 5.84%). XLE’s exposure to Technology and Industrials stocks is 6.02% lower and 14.58% lower respectively (0.0% vs. 6.02% and 0.0% vs. 14.58%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 45.72% less of the fund’s holdings compared to IWN (0.00% vs. 45.72%).
|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%.
|AMC Entertainment Holdings Inc Class A||1.06%|
|Tenet Healthcare Corp||0.47%|
|Stag Industrial Inc||0.47%|
|EMCOR Group Inc||0.42%|
|Valley National Bancorp||0.37%|
|Chesapeake Energy Corp Ordinary Shares – New||0.37%|
|Agree Realty Corp||0.36%|
|Essent Group Ltd||0.35%|
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
The Energy Select Sector SPDR Fund (XLE) has a R-squared of 61.84 with a Alpha of -11.98 and a Mean Return of 0.32. Its Treynor Ratio is -0.4 while XLE’s Standard Deviation is 27.52. Furthermore, the fund has a Sharpe Ratio of 0.12 and a Beta of 1.54.
The iShares Russell 2000 Value ETF (IWN) has a Treynor Ratio of 8.3 with a R-squared of 72.64 and a Mean Return of 1.01. Its Beta is 1.21 while IWN’s Sharpe Ratio is 0.59. Furthermore, the fund has a Standard Deviation of 19.28 and a Alpha of -6.32.
XLE’s Mean Return is 0.69 points lower than that of IWN and its R-squared is 10.80 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than IWN. The Alpha and Beta of XLE are 5.66 points lower and 0.33 points higher than IWN’s Alpha and Beta.
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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% 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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.
XLE’s CAGR is 9.68 percentage points lower than that of IWN and as a result, would have yielded $18,850 less on a $10,000 investment. Thus, XLE performed worse than IWN by 9.68% annually.
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