XLE vs. IWP: What’s The Difference?

The Energy Select Sector SPDR Fund (XLE) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between XLE and IWP? And which fund is better?

The expense ratio of XLE is 0.12 percentage points lower than IWP’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 IWP over the past 11 years.

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

Summary

XLE IWP
Name Energy Select Sector SPDR Fund iShares Russell Mid-Cap Growth ETF
Category Equity Energy Mid-Cap Growth
Issuer SPDR State Street Global Advisors iShares
AUM 25.55B 15.7B
Avg. Return 1.28% 16.75%
Div. Yield 3.92% 0.26%
Expense Ratio 0.12% 0.24%

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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

XLE’s dividend yield is 3.66% higher than that of IWP (3.92% vs. 0.26%). Also, XLE yielded on average 15.47% less per year over the past decade (1.28% vs. 16.75%). The expense ratio of XLE is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

XLE vs. IWP - Industry Exposure

XLE IWP
Technology 0.0% 33.88%
Industrials 0.0% 14.09%
Energy 100.0% 1.51%
Communication Services 0.0% 6.32%
Utilities 0.0% 0.16%
Healthcare 0.0% 16.79%
Consumer Defensive 0.0% 2.32%
Real Estate 0.0% 2.46%
Financial Services 0.0% 4.52%
Consumer Cyclical 0.0% 16.09%
Basic Materials 0.0% 1.86%

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 Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

XLE is 98.49% more exposed to the Energy sector than IWP (100.0% vs 1.51%). XLE’s exposure to Technology and Industrials stocks is 33.88% lower and 14.09% lower respectively (0.0% vs. 33.88% and 0.0% vs. 14.09%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 23.07% less of the fund’s holdings compared to IWP (0.00% vs. 23.07%).

Holdings

XLE - 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%.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

XLE IWP
Mean Return 0.32 1.27
R-squared 61.84 87.01
Std. Deviation 27.52 16.05
Alpha -11.98 -1.03
Beta 1.54 1.1
Sharpe Ratio 0.12 0.91
Treynor Ratio -0.4 12.98

The Energy Select Sector SPDR Fund (XLE) has a Alpha of -11.98 with a Sharpe Ratio of 0.12 and a Treynor Ratio of -0.4. Its Standard Deviation is 27.52 while XLE’s Beta is 1.54. Furthermore, the fund has a Mean Return of 0.32 and a R-squared of 61.84.

The iShares Russell Mid-Cap Growth ETF (IWP) has a Mean Return of 1.27 with a Treynor Ratio of 12.98 and a R-squared of 87.01. Its Sharpe Ratio is 0.91 while IWP’s Alpha is -1.03. Furthermore, the fund has a Standard Deviation of 16.05 and a Beta of 1.1.

XLE’s Mean Return is 0.95 points lower than that of IWP and its R-squared is 25.17 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than IWP. The Alpha and Beta of XLE are 10.95 points lower and 0.44 points higher than IWP’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

XLE vs. IWP - Annual Returns

Year XLE IWP
2020 -32.56% 35.29%
2019 11.87% 35.14%
2018 -18.1% -4.95%
2017 -1.01% 24.98%
2016 27.95% 7.15%
2015 -21.47% -0.39%
2014 -8.61% 11.68%
2013 26.16% 35.44%
2012 5.17% 15.62%
2011 2.98% -1.82%
2010 21.7% 26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

XLE vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLE $10,000 $9,339 1.28%
IWP $10,000 $50,191 16.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

XLE’s CAGR is 15.47 percentage points lower than that of IWP and as a result, would have yielded $40,852 less on a $10,000 investment. Thus, XLE performed worse than IWP by 15.47% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply