XLI vs. ACWI: What’s The Difference?

The Industrial Select Sector SPDR Fund (XLI) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. XLI is a SPDR State Street Global Advisors Industrials fund and ACWI is a iShares N/A fund. So, what’s the difference between XLI and ACWI? And which fund is better?

The expense ratio of XLI is 0.20 percentage points lower than ACWI’s (0.12% vs. 0.32%). XLI also has a higher exposure to the industrials sector and a higher standard deviation. Overall, XLI has provided higher returns than ACWI over the past 11 years.

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

Summary

XLI ACWI
Name Industrial Select Sector SPDR Fund iShares MSCI ACWI ETF
Category Industrials N/A
Issuer SPDR State Street Global Advisors iShares
AUM 19.33B 16.85B
Avg. Return 14.44% 10.21%
Div. Yield 1.25% 1.39%
Expense Ratio 0.12% 0.32%

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%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

XLI’s dividend yield is 0.14% lower than that of ACWI (1.25% vs. 1.39%). Also, XLI yielded on average 4.23% more per year over the past decade (14.44% vs. 10.21%). The expense ratio of XLI is 0.20 percentage points lower than ACWI’s (0.12% vs. 0.32%).

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Fund Composition

Industry Exposure

XLI vs. ACWI - Industry Exposure

XLI ACWI
Technology 1.82% 20.41%
Industrials 97.49% 9.65%
Energy 0.0% 3.48%
Communication Services 0.0% 9.87%
Utilities 0.0% 2.61%
Healthcare 0.0% 11.74%
Consumer Defensive 0.0% 7.15%
Real Estate 0.0% 2.75%
Financial Services 0.0% 15.58%
Consumer Cyclical 0.69% 12.01%
Basic Materials 0.0% 4.73%

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%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

XLI is 87.84% more exposed to the Industrials sector than ACWI (97.49% vs 9.65%). XLI’s exposure to Technology and Consumer Cyclical stocks is 18.59% lower and 11.32% lower respectively (1.82% vs. 20.41% and 0.69% vs. 12.01%). In total, Financial Services, Real Estate, and Consumer Defensive also make up 25.48% less of the fund’s holdings compared to ACWI (0.00% vs. 25.48%).

Holdings

XLI - Holdings

XLI Holdings Weight
Honeywell International Inc 4.9%
United Parcel Service Inc Class B 4.84%
Union Pacific Corp 4.7%
Boeing Co 4.24%
Raytheon Technologies Corp 4.16%
Caterpillar Inc 3.84%
General Electric Co 3.8%
3M Co 3.7%
Deere & Co 3.54%
Lockheed Martin Corp 2.98%

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%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

XLI ACWI
Mean Return 1.14 0.89
R-squared 78.97 99.96
Std. Deviation 17.13 14.05
Alpha 2.38 0.15
Beta 1.08 1
Sharpe Ratio 0.76 0.71
Treynor Ratio 11.34 9.45

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

The iShares MSCI ACWI ETF (ACWI) has a Standard Deviation of 14.05 with a R-squared of 99.96 and a Mean Return of 0.89. Its Beta is 1 while ACWI’s Alpha is 0.15. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Treynor Ratio of 9.45.

XLI’s Mean Return is 0.25 points higher than that of ACWI and its R-squared is 20.99 points lower. With a Standard Deviation of 17.13, XLI is slightly more volatile than ACWI. The Alpha and Beta of XLI are 2.23 points higher and 0.08 points higher than ACWI’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. ACWI - Annual Returns

Year XLI ACWI
2020 11.0% 16.38%
2019 29.11% 26.7%
2018 -13.1% -9.15%
2017 23.85% 24.35%
2016 19.93% 8.22%
2015 -4.27% -2.39%
2014 10.44% 4.64%
2013 40.44% 22.91%
2012 14.86% 15.99%
2011 -1.01% -7.6%
2010 27.62% 12.31%

XLI had its best year in 2013 with an annual return of 40.44%. XLI’s worst year over the past decade yielded -13.1% and occurred in 2018. In most years the Industrial Select Sector SPDR Fund provided moderate returns such as in 2020, 2012, and 2016 where annual returns amounted to 11.0%, 14.86%, and 19.93% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

XLI vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLI $10,000 $39,853 14.44%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in XLI would have resulted in a final balance of $39,853. This is a profit of $29,853 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.44%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

XLI’s CAGR is 4.23 percentage points higher than that of ACWI and as a result, would have yielded $12,612 more on a $10,000 investment. Thus, XLI outperformed ACWI by 4.23% annually.


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