XLF vs. IVE: What’s The Difference?

The Financial Select Sector SPDR Fund (XLF) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and IVE is a iShares Large Value fund. So, what’s the difference between XLF and IVE? And which fund is better?

The expense ratio of XLF is 0.06 percentage points lower than IVE’s (0.12% vs. 0.18%). XLF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, XLF has provided higher returns than IVE over the past ten years.

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

Summary

XLF IVE
Name Financial Select Sector SPDR Fund iShares S&P 500 Value ETF
Category Financial Large Value
Issuer SPDR State Street Global Advisors iShares
AUM 40.81B 22.4B
Avg. Return 12.17% 11.68%
Div. Yield 1.57% 1.88%
Expense Ratio 0.12% 0.18%

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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

XLF’s dividend yield is 0.31% lower than that of IVE (1.57% vs. 1.88%). Also, XLF yielded on average 0.48% more per year over the past decade (12.17% vs. 11.68%). The expense ratio of XLF is 0.06 percentage points lower than IVE’s (0.12% vs. 0.18%).

Fund Composition

Industry Exposure

XLF vs. IVE - Industry Exposure

XLF IVE
Technology 0.0% 9.41%
Industrials 0.0% 12.19%
Energy 0.0% 5.43%
Communication Services 0.0% 6.4%
Utilities 0.0% 4.82%
Healthcare 0.0% 15.4%
Consumer Defensive 0.0% 9.23%
Real Estate 0.0% 4.38%
Financial Services 100.0% 22.06%
Consumer Cyclical 0.0% 7.68%
Basic Materials 0.0% 2.99%

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 S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.

IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.

XLF is 77.94% more exposed to the Financial Services sector than IVE (100.0% vs 22.06%). XLF’s exposure to Technology and Industrials stocks is 9.41% lower and 12.19% lower respectively (0.0% vs. 9.41% and 0.0% vs. 12.19%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.29% less of the fund’s holdings compared to IVE (0.00% vs. 21.29%).

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%.

IVE - Holdings

IVE Holdings Weight
Berkshire Hathaway Inc Class B 3.05%
JPMorgan Chase & Co 2.65%
The Walt Disney Co 1.85%
Bank of America Corp 1.67%
Johnson & Johnson 1.57%
Exxon Mobil Corp 1.41%
Pfizer Inc 1.38%
Cisco Systems Inc 1.35%
Verizon Communications Inc 1.33%
Intel Corp 1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

Risk Analysis

XLF IVE
Mean Return 1.21 1.05
R-squared 73.26 92.08
Std. Deviation 18.86 14.3
Alpha 2.63 -2.9
Beta 1.15 1.01
Sharpe Ratio 0.74 0.83
Treynor Ratio 11.25 11.41

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

The iShares S&P 500 Value ETF (IVE) has a Sharpe Ratio of 0.83 with a R-squared of 92.08 and a Alpha of -2.9. Its Standard Deviation is 14.3 while IVE’s Beta is 1.01. Furthermore, the fund has a Treynor Ratio of 11.41 and a Mean Return of 1.05.

XLF’s Mean Return is 0.16 points higher than that of IVE and its R-squared is 18.82 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than IVE. The Alpha and Beta of XLF are 5.53 points higher and 0.14 points higher than IVE’s Alpha and Beta.

Performance

Annual Returns

XLF vs. IVE - Annual Returns

Year XLF IVE
2020 -1.68% 1.24%
2019 31.88% 31.71%
2018 -13.09% -9.09%
2017 22.03% 15.19%
2016 22.55% 17.17%
2015 -1.6% -3.24%
2014 15.02% 12.14%
2013 35.37% 31.69%
2012 28.53% 17.45%
2011 -17.16% -0.63%
2010 11.97% 14.9%

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 2019 was the strongest year for IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.

Portfolio Growth

XLF vs. IVE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLF $10,000 $30,782 12.17%
IVE $10,000 $31,350 11.68%

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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.

XLF’s CAGR is 0.48 percentage points higher than that of IVE and as a result, would have yielded $568 less on a $10,000 investment. Thus, XLF outperformed IVE by 0.48% annually.


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