XLF vs. EFV: What’s The Difference?

The Financial Select Sector SPDR Fund (XLF) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between XLF and EFV? And which fund is better?

The expense ratio of XLF is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%). XLF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, XLF has provided higher returns than EFV over the past ten years.

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

Summary

XLF EFV
Name Financial Select Sector SPDR Fund iShares MSCI EAFE Value ETF
Category Financial Foreign Large Value
Issuer SPDR State Street Global Advisors iShares
AUM 40.81B 14.37B
Avg. Return 12.17% 3.99%
Div. Yield 1.57% 2.94%
Expense Ratio 0.12% 0.39%

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 iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.

XLF’s dividend yield is 1.37% lower than that of EFV (1.57% vs. 2.94%). Also, XLF yielded on average 8.17% more per year over the past decade (12.17% vs. 3.99%). The expense ratio of XLF is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%).

Fund Composition

Industry Exposure

XLF vs. EFV - Industry Exposure

XLF EFV
Technology 0.0% 2.98%
Industrials 0.0% 11.6%
Energy 0.0% 6.6%
Communication Services 0.0% 6.46%
Utilities 0.0% 6.14%
Healthcare 0.0% 9.19%
Consumer Defensive 0.0% 6.82%
Real Estate 0.0% 5.06%
Financial Services 100.0% 26.55%
Consumer Cyclical 0.0% 9.0%
Basic Materials 0.0% 9.59%

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 iShares MSCI EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.

EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.

XLF is 73.45% more exposed to the Financial Services sector than EFV (100.0% vs 26.55%). XLF’s exposure to Technology and Industrials stocks is 2.98% lower and 11.60% lower respectively (0.0% vs. 2.98% and 0.0% vs. 11.6%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.88% less of the fund’s holdings compared to EFV (0.00% vs. 20.88%).

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%.

EFV - Holdings

EFV Holdings Weight
Novartis AG 2.41%
Toyota Motor Corp 2.21%
Commonwealth Bank of Australia 1.59%
Siemens AG 1.45%
Sanofi SA 1.42%
HSBC Holdings PLC 1.4%
TotalEnergies SE 1.35%
Allianz SE 1.23%
GlaxoSmithKline PLC 1.18%
Rio Tinto PLC 1.1%

EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.

HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.

Risk Analysis

XLF EFV
Mean Return 1.21 0.42
R-squared 73.26 92.15
Std. Deviation 18.86 16.53
Alpha 2.63 -1.77
Beta 1.15 1.05
Sharpe Ratio 0.74 0.26
Treynor Ratio 11.25 2.92

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

The iShares MSCI EAFE Value ETF (EFV) has a Standard Deviation of 16.53 with a Mean Return of 0.42 and a Treynor Ratio of 2.92. Its Beta is 1.05 while EFV’s Alpha is -1.77. Furthermore, the fund has a Sharpe Ratio of 0.26 and a R-squared of 92.15.

XLF’s Mean Return is 0.79 points higher than that of EFV and its R-squared is 18.89 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than EFV. The Alpha and Beta of XLF are 4.40 points higher and 0.10 points higher than EFV’s Alpha and Beta.

Performance

Annual Returns

XLF vs. EFV - Annual Returns

Year XLF EFV
2020 -1.68% -2.78%
2019 31.88% 15.97%
2018 -13.09% -14.88%
2017 22.03% 21.22%
2016 22.55% 4.87%
2015 -1.6% -5.89%
2014 15.02% -5.65%
2013 35.37% 22.61%
2012 28.53% 17.52%
2011 -17.16% -12.24%
2010 11.97% 3.18%

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 EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.

Portfolio Growth

XLF vs. EFV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLF $10,000 $30,782 12.17%
EFV $10,000 $14,134 3.99%

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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.

XLF’s CAGR is 8.17 percentage points higher than that of EFV and as a result, would have yielded $16,648 more on a $10,000 investment. Thus, XLF outperformed EFV by 8.17% annually.


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