XLI vs. BIV: What’s The Difference?

The Industrial Select Sector SPDR Fund (XLI) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. XLI is a SPDR State Street Global Advisors Industrials fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between XLI and BIV? And which fund is better?

The expense ratio of XLI is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%). XLI also has a high exposure to the industrials sector while BIV is mostly comprised of AAA bonds. Overall, XLI has provided higher returns than BIV over the past 11 years.

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

Summary

XLI BIV
Name Industrial Select Sector SPDR Fund Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Industrials Intermediate-Term Bond
Issuer SPDR State Street Global Advisors Vanguard
AUM 19.33B 39.05B
Avg. Return 14.44% 5.31%
Div. Yield 1.25% 2.06%
Expense Ratio 0.12% 0.05%

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 Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

XLI’s dividend yield is 0.81% lower than that of BIV (1.25% vs. 2.06%). Also, XLI yielded on average 9.13% more per year over the past decade (14.44% vs. 5.31%). The expense ratio of XLI is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%).

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Fund Composition

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%.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

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Risk Analysis

XLI BIV
Mean Return 1.14 0.35
R-squared 78.97 95.12
Std. Deviation 17.13 4.09
Alpha 2.38 -0.07
Beta 1.08 1.33
Sharpe Ratio 0.76 0.89
Treynor Ratio 11.34 2.72

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

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Mean Return of 0.35 with a Standard Deviation of 4.09 and a Alpha of -0.07. Its Sharpe Ratio is 0.89 while BIV’s Treynor Ratio is 2.72. Furthermore, the fund has a Beta of 1.33 and a R-squared of 95.12.

XLI’s Mean Return is 0.79 points higher than that of BIV and its R-squared is 16.15 points lower. With a Standard Deviation of 17.13, XLI is slightly more volatile than BIV. The Alpha and Beta of XLI are 2.45 points higher and 0.25 points lower than BIV’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. BIV - Annual Returns

Year XLI BIV
2020 11.0% 9.71%
2019 29.11% 10.19%
2018 -13.1% -0.09%
2017 23.85% 3.8%
2016 19.93% 2.86%
2015 -4.27% 1.23%
2014 10.44% 7.0%
2013 40.44% -3.44%
2012 14.86% 7.02%
2011 -1.01% 10.62%
2010 27.62% 9.55%

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 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

XLI vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLI $10,000 $39,853 14.44%
BIV $10,000 $17,492 5.31%

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 BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.

XLI’s CAGR is 9.13 percentage points higher than that of BIV and as a result, would have yielded $22,361 more on a $10,000 investment. Thus, XLI outperformed BIV by 9.13% annually.


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