XLF vs. DIA: What’s The Difference?

The Financial Select Sector SPDR Fund (XLF) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between XLF and DIA? And which fund is better?

The expense ratio of XLF is 0.04 percentage points lower than DIA’s (0.12% vs. 0.16%). XLF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, XLF has provided lower returns than DIA over the past ten years.

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

Summary

XLF DIA
Name Financial Select Sector SPDR Fund SPDR Dow Jones Industrial Average ETF Trust
Category Financial Large Value
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 40.81B 30.46B
Avg. Return 12.17% 13.35%
Div. Yield 1.57% 1.61%
Expense Ratio 0.12% 0.16%

The Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

XLF’s dividend yield is 0.04% lower than that of DIA (1.57% vs. 1.61%). Also, XLF yielded on average 1.19% less per year over the past decade (12.17% vs. 13.35%). The expense ratio of XLF is 0.04 percentage points lower than DIA’s (0.12% vs. 0.16%).

Fund Composition

Industry Exposure

XLF vs. DIA - Industry Exposure

XLF DIA
Technology 0.0% 17.32%
Industrials 0.0% 16.7%
Energy 0.0% 2.0%
Communication Services 0.0% 4.42%
Utilities 0.0% 0.0%
Healthcare 0.0% 17.92%
Consumer Defensive 0.0% 6.3%
Real Estate 0.0% 0.0%
Financial Services 100.0% 20.68%
Consumer Cyclical 0.0% 13.44%
Basic Materials 0.0% 1.21%

The Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLF’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.

DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.

XLF is 79.32% more exposed to the Financial Services sector than DIA (100.0% vs 20.68%). XLF’s exposure to Technology and Industrials stocks is 17.32% lower and 16.70% lower respectively (0.0% vs. 17.32% and 0.0% vs. 16.7%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 19.74% less of the fund’s holdings compared to DIA (0.00% vs. 19.74%).

Holdings

XLF - Holdings

XLF Holdings Weight
Berkshire Hathaway Inc Class B 12.83%
JPMorgan Chase & Co 11.47%
Bank of America Corp 7.57%
Wells Fargo & Co 4.56%
Citigroup Inc 3.56%
Morgan Stanley 3.32%
Goldman Sachs Group Inc 3.15%
BlackRock Inc 3.02%
Charles Schwab Corp 2.66%
American Express Co 2.62%

XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.

Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.

DIA - Holdings

DIA Holdings Weight
UnitedHealth Group Inc 7.63%
Goldman Sachs Group Inc 7.23%
The Home Depot Inc 6.07%
Microsoft Corp 5.16%
Salesforce.com Inc 4.65%
Amgen Inc 4.64%
Boeing Co 4.56%
Visa Inc Class A 4.45%
McDonald’s Corp 4.4%
Honeywell International Inc 4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

Risk Analysis

XLF DIA
Mean Return 1.21 1.13
R-squared 73.26 93.31
Std. Deviation 18.86 13.68
Alpha 2.63 -0.94
Beta 1.15 0.97
Sharpe Ratio 0.74 0.94
Treynor Ratio 11.25 13.07

The Financial Select Sector SPDR Fund (XLF) has a Sharpe Ratio of 0.74 with a Treynor Ratio of 11.25 and a Beta of 1.15. Its R-squared is 73.26 while XLF’s Mean Return is 1.21. Furthermore, the fund has a Alpha of 2.63 and a Standard Deviation of 18.86.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Sharpe Ratio of 0.94 with a Standard Deviation of 13.68 and a R-squared of 93.31. Its Treynor Ratio is 13.07 while DIA’s Mean Return is 1.13. Furthermore, the fund has a Beta of 0.97 and a Alpha of -0.94.

XLF’s Mean Return is 0.08 points higher than that of DIA and its R-squared is 20.05 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than DIA. The Alpha and Beta of XLF are 3.57 points higher and 0.18 points higher than DIA’s Alpha and Beta.

Performance

Annual Returns

XLF vs. DIA - Annual Returns

Year XLF DIA
2020 -1.68% 9.63%
2019 31.88% 25.09%
2018 -13.09% -3.6%
2017 22.03% 27.97%
2016 22.55% 16.28%
2015 -1.6% 0.1%
2014 15.02% 9.88%
2013 35.37% 29.41%
2012 28.53% 10.04%
2011 -17.16% 8.21%
2010 11.97% 13.87%

XLF had its best year in 2013 with an annual return of 35.37%. XLF’s worst year over the past decade yielded -17.16% and occurred in 2011. In most years the Financial Select Sector SPDR Fund provided moderate returns such as in 2010, 2014, and 2017 where annual returns amounted to 11.97%, 15.02%, and 22.03% respectively.

The year 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.

Portfolio Growth

XLF vs. DIA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLF $10,000 $30,782 12.17%
DIA $10,000 $37,965 13.35%

A $10,000 investment in XLF would have resulted in a final balance of $30,782. This is a profit of $20,782 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.17%.

With a $10,000 investment in DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.

XLF’s CAGR is 1.19 percentage points lower than that of DIA and as a result, would have yielded $7,183 less on a $10,000 investment. Thus, XLF performed worse than DIA by 1.19% annually.


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