The Energy Select Sector SPDR Fund (XLE) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between XLE and MUB? And which fund is better?
The expense ratio of XLE is 0.05 percentage points higher than MUB’s (0.12% vs. 0.07%). XLE also has a high exposure to the energy sector while MUB is mostly comprised of AA bonds. Overall, XLE has provided lower returns than MUB over the past 11 years.
In this article, we’ll compare XLE vs. MUB. We’ll look at industry exposure and fund composition, as well as at their annual returns and holdings. Moreover, I’ll also discuss XLE’s and MUB’s portfolio growth, performance, and risk metrics and examine how these affect their overall returns.
|Name||Energy Select Sector SPDR Fund||iShares National Muni Bond ETF|
|Category||Equity Energy||Muni National Interm|
|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 National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.
XLE’s dividend yield is 1.96% higher than that of MUB (3.92% vs. 1.96%). Also, XLE yielded on average 2.76% less per year over the past decade (1.28% vs. 4.04%). The expense ratio of XLE is 0.05 percentage points higher than MUB’s (0.12% vs. 0.07%).
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).
|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%.
|MUB Bond Sectors||Weight|
MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.
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).
The Energy Select Sector SPDR Fund (XLE) has a Alpha of -11.98 with a Sharpe Ratio of 0.12 and a Standard Deviation of 27.52. Its R-squared is 61.84 while XLE’s Beta is 1.54. Furthermore, the fund has a Treynor Ratio of -0.4 and a Mean Return of 0.32.
The iShares National Muni Bond ETF (MUB) has a Beta of 1.01 with a Mean Return of 0.32 and a Alpha of -0.46. Its Sharpe Ratio is 0.88 while MUB’s R-squared is 99. Furthermore, the fund has a Treynor Ratio of 3.2 and a Standard Deviation of 3.68.
XLE’s Mean Return is 0.00 points lower than that of MUB and its R-squared is 37.16 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than MUB. The Alpha and Beta of XLE are 11.52 points lower and 0.53 points higher than MUB’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% 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 MUB, the end total would have been $15,333. This equates to a $5,333 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.
XLE’s CAGR is 2.76 percentage points lower than that of MUB and as a result, would have yielded $5,994 less on a $10,000 investment. Thus, XLE performed worse than MUB by 2.76% annually.
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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.