The Energy Select Sector SPDR Fund (XLE) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between XLE and XLI? And which fund is better?

XLE and XLI have the same expense ratio: 0.12%. XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than XLI over the past 11 years.

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

Summary

XLEXLI
NameEnergy Select Sector SPDR FundIndustrial Select Sector SPDR Fund
CategoryEquity EnergyIndustrials
IssuerSPDR State Street Global AdvisorsSPDR State Street Global Advisors
AUM25.55B19.33B
Avg. Return1.28%14.44%
Div. Yield3.92%1.25%
Expense Ratio0.12%0.12%

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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.

XLE’s dividend yield is 2.67% higher than that of XLI (3.92% vs. 1.25%). Also, XLE yielded on average 13.16% less per year over the past decade (1.28% vs. 14.44%). XLE and XLI have the same expense ratio: 0.12%.

Fund Composition

Industry Exposure

XLE vs. XLI - Industry Exposure

XLEXLI
Technology0.0%1.82%
Industrials0.0%97.49%
Energy100.0%0.0%
Communication Services0.0%0.0%
Utilities0.0%0.0%
Healthcare0.0%0.0%
Consumer Defensive0.0%0.0%
Real Estate0.0%0.0%
Financial Services0.0%0.0%
Consumer Cyclical0.0%0.69%
Basic Materials0.0%0.0%

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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.

XLE is 100.00% more exposed to the Energy sector than XLI (100.0% vs 0.0%). XLE’s exposure to Technology and Industrials stocks is 1.82% lower and 97.49% lower respectively (0.0% vs. 1.82% and 0.0% vs. 97.49%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 0.69% less of the fund’s holdings compared to XLI (0.00% vs. 0.69%).

Holdings

XLE - Holdings

XLE HoldingsWeight
Exxon Mobil Corp23.7%
Chevron Corp20.03%
ConocoPhillips4.64%
EOG Resources Inc4.46%
Schlumberger Ltd4.43%
Marathon Petroleum Corp4.17%
Pioneer Natural Resources Co4.08%
Phillips 664.07%
Kinder Morgan Inc Class P3.85%
Williams Companies Inc3.5%

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%.

XLI - Holdings

XLI HoldingsWeight
Honeywell International Inc4.9%
United Parcel Service Inc Class B4.84%
Union Pacific Corp4.7%
Boeing Co4.24%
Raytheon Technologies Corp4.16%
Caterpillar Inc3.84%
General Electric Co3.8%
3M Co3.7%
Deere & Co3.54%
Lockheed Martin Corp2.98%

XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.

Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.

Risk Analysis

XLEXLI
Mean Return0.321.14
R-squared61.8478.97
Std. Deviation27.5217.13
Alpha-11.982.38
Beta1.541.08
Sharpe Ratio0.120.76
Treynor Ratio-0.411.34

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

The Industrial Select Sector SPDR Fund (XLI) has a Sharpe Ratio of 0.76 with a Standard Deviation of 17.13 and a Beta of 1.08. Its R-squared is 78.97 while XLI’s Alpha is 2.38. Furthermore, the fund has a Mean Return of 1.14 and a Treynor Ratio of 11.34.

XLE’s Mean Return is 0.82 points lower than that of XLI and its R-squared is 17.13 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than XLI. The Alpha and Beta of XLE are 14.36 points lower and 0.46 points higher than XLI’s Alpha and Beta.

Performance

Annual Returns

XLE vs. XLI - Annual Returns

YearXLEXLI
2020-32.56%11.0%
201911.87%29.11%
2018-18.1%-13.1%
2017-1.01%23.85%
201627.95%19.93%
2015-21.47%-4.27%
2014-8.61%10.44%
201326.16%40.44%
20125.17%14.86%
20112.98%-1.01%
201021.7%27.62%

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 XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.

Portfolio Growth

XLE vs. XLI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLE$10,000$9,3391.28%
XLI$10,000$39,85314.44%

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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.

XLE’s CAGR is 13.16 percentage points lower than that of XLI and as a result, would have yielded $30,514 less on a $10,000 investment. Thus, XLE performed worse than XLI by 13.16% annually.

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