XLF vs. ITOT: What’s The Difference?

The Financial Select Sector SPDR Fund (XLF) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and ITOT is a iShares Large Blend fund. So, what’s the difference between XLF and ITOT? And which fund is better?

The expense ratio of XLF is 0.09 percentage points higher than ITOT’s (0.12% vs. 0.03%). XLF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, XLF has provided lower returns than ITOT over the past ten years.

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

Summary

XLF ITOT
Name Financial Select Sector SPDR Fund iShares Core S&P Total U.S. Stock Market ETF
Category Financial Large Blend
Issuer SPDR State Street Global Advisors iShares
AUM 40.81B 41.97B
Avg. Return 12.17% 14.59%
Div. Yield 1.57% 1.2%
Expense Ratio 0.12% 0.03%

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 Core S&P Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.

XLF’s dividend yield is 0.37% higher than that of ITOT (1.57% vs. 1.2%). Also, XLF yielded on average 2.42% less per year over the past decade (12.17% vs. 14.59%). The expense ratio of XLF is 0.09 percentage points higher than ITOT’s (0.12% vs. 0.03%).

Fund Composition

Industry Exposure

XLF vs. ITOT - Industry Exposure

XLF ITOT
Technology 0.0% 24.49%
Industrials 0.0% 9.21%
Energy 0.0% 2.51%
Communication Services 0.0% 10.54%
Utilities 0.0% 2.35%
Healthcare 0.0% 13.59%
Consumer Defensive 0.0% 5.79%
Real Estate 0.0% 3.67%
Financial Services 100.0% 13.69%
Consumer Cyclical 0.0% 11.69%
Basic Materials 0.0% 2.47%

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 Core S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.

ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.

XLF is 86.31% more exposed to the Financial Services sector than ITOT (100.0% vs 13.69%). XLF’s exposure to Technology and Industrials stocks is 24.49% lower and 9.21% lower respectively (0.0% vs. 24.49% and 0.0% vs. 9.21%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.15% less of the fund’s holdings compared to ITOT (0.00% vs. 21.15%).

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%.

ITOT - Holdings

ITOT Holdings Weight
Apple Inc 5.07%
Microsoft Corp 4.75%
Amazon.com Inc 3.16%
Facebook Inc Class A 1.89%
Alphabet Inc Class A 1.79%
Alphabet Inc Class C 1.71%
Tesla Inc 1.17%
Berkshire Hathaway Inc Class B 1.17%
NVIDIA Corp 1.08%
JPMorgan Chase & Co 1.02%

ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.

Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.

Risk Analysis

XLF ITOT
Mean Return 1.21 1.27
R-squared 73.26 99.4
Std. Deviation 18.86 14.02
Alpha 2.63 -0.54
Beta 1.15 1.03
Sharpe Ratio 0.74 1.04
Treynor Ratio 11.25 14.13

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

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Alpha of -0.54 with a Mean Return of 1.27 and a Sharpe Ratio of 1.04. Its Standard Deviation is 14.02 while ITOT’s Beta is 1.03. Furthermore, the fund has a Treynor Ratio of 14.13 and a R-squared of 99.4.

XLF’s Mean Return is 0.06 points lower than that of ITOT and its R-squared is 26.14 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than ITOT. The Alpha and Beta of XLF are 3.17 points higher and 0.12 points higher than ITOT’s Alpha and Beta.

Performance

Annual Returns

XLF vs. ITOT - Annual Returns

Year XLF ITOT
2020 -1.68% 20.75%
2019 31.88% 30.87%
2018 -13.09% -5.27%
2017 22.03% 21.23%
2016 22.55% 12.59%
2015 -1.6% 0.96%
2014 15.02% 13.01%
2013 35.37% 32.67%
2012 28.53% 15.98%
2011 -17.16% 1.55%
2010 11.97% 16.15%

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 ITOT, returning 32.67% on an annual basis. The poorest year for ITOT in the last ten years was 2018, with a yield of -5.27%. Most years the iShares Core S&P Total U.S. Stock Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 13.01%, 15.98%, and 16.15% respectively.

Portfolio Growth

XLF vs. ITOT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLF $10,000 $30,782 12.17%
ITOT $10,000 $42,310 14.59%

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 ITOT, the end total would have been $42,310. This equates to a $32,310 profit over 11 years and a compound annual growth rate (CAGR) of 14.59%.

XLF’s CAGR is 2.42 percentage points lower than that of ITOT and as a result, would have yielded $11,528 less on a $10,000 investment. Thus, XLF performed worse than ITOT by 2.42% annually.


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