The Energy Select Sector SPDR Fund (XLE) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and USMV is a iShares Large Blend fund. So, what’s the difference between XLE and USMV? And which fund is better?
The expense ratio of XLE is 0.03 percentage points lower than USMV’s (0.12% vs. 0.15%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than USMV over the past 8 years.
In this article, we’ll compare XLE vs. USMV. We’ll look at portfolio growth and risk metrics, as well as at their performance and annual returns. Moreover, I’ll also discuss XLE’s and USMV’s fund composition, holdings, and industry exposure and examine how these affect their overall returns.
|Name||Energy Select Sector SPDR Fund||iShares MSCI USA Min Vol Factor ETF|
|Category||Equity Energy||Large Blend|
|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 MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
XLE’s dividend yield is 2.42% higher than that of USMV (3.92% vs. 1.5%). Also, XLE yielded on average 12.61% less per year over the past decade (1.28% vs. 13.89%). The expense ratio of XLE is 0.03 percentage points lower than USMV’s (0.12% vs. 0.15%).
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 USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.
USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.
XLE is 99.79% more exposed to the Energy sector than USMV (100.0% vs 0.21%). XLE’s exposure to Technology and Industrials stocks is 20.53% lower and 10.51% lower respectively (0.0% vs. 20.53% and 0.0% vs. 10.51%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 17.91% less of the fund’s holdings compared to USMV (0.00% vs. 17.91%).
|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%.
|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management Inc||1.45%|
|The Kroger Co||1.44%|
|Johnson & Johnson||1.42%|
|Gilead Sciences Inc||1.42%|
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
The Energy Select Sector SPDR Fund (XLE) has a R-squared of 61.84 with a Mean Return of 0.32 and a Sharpe Ratio of 0.12. Its Beta is 1.54 while XLE’s Standard Deviation is 27.52. Furthermore, the fund has a Treynor Ratio of -0.4 and a Alpha of -11.98.
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Standard Deviation of 0 with a Beta of 0 and a Mean Return of 0. Its Treynor Ratio is 0 while USMV’s Sharpe Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Alpha of 0.
XLE’s Mean Return is 0.32 points higher than that of USMV and its R-squared is 61.84 points higher. With a Standard Deviation of 27.52, XLE is slightly more volatile than USMV. The Alpha and Beta of XLE are 11.98 points lower and 1.54 points higher than USMV’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 2019 was the strongest year for USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in XLE would have resulted in a final balance of $7,086. This is a profit of $-2,914 over 8 years and amounts to a compound annual growth rate (CAGR) of 1.28%.
With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.
XLE’s CAGR is 12.61 percentage points lower than that of USMV and as a result, would have yielded $20,521 less on a $10,000 investment. Thus, XLE performed worse than USMV by 12.61% annually.
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