XLI vs. EFV: What’s The Difference?

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

The expense ratio of XLI is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%). XLI also has a higher exposure to the industrials sector and a higher standard deviation. Overall, XLI has provided higher returns than EFV over the past 11 years.

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

Summary

XLI EFV
Name Industrial Select Sector SPDR Fund iShares MSCI EAFE Value ETF
Category Industrials Foreign Large Value
Issuer SPDR State Street Global Advisors iShares
AUM 19.33B 14.37B
Avg. Return 14.44% 3.99%
Div. Yield 1.25% 2.94%
Expense Ratio 0.12% 0.39%

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 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%.

XLI’s dividend yield is 1.69% lower than that of EFV (1.25% vs. 2.94%). Also, XLI yielded on average 10.45% more per year over the past decade (14.44% vs. 3.99%). The expense ratio of XLI is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%).

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Fund Composition

Industry Exposure

XLI vs. EFV - Industry Exposure

XLI EFV
Technology 1.82% 2.98%
Industrials 97.49% 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 0.0% 26.55%
Consumer Cyclical 0.69% 9.0%
Basic Materials 0.0% 9.59%

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 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%.

XLI is 85.89% more exposed to the Industrials sector than EFV (97.49% vs 11.6%). XLI’s exposure to Technology and Consumer Cyclical stocks is 1.16% lower and 8.31% lower respectively (1.82% vs. 2.98% and 0.69% vs. 9.0%). In total, Financial Services, Real Estate, and Consumer Defensive also make up 38.43% less of the fund’s holdings compared to EFV (0.00% vs. 38.43%).

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%.

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%.

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Risk Analysis

XLI EFV
Mean Return 1.14 0.42
R-squared 78.97 92.15
Std. Deviation 17.13 16.53
Alpha 2.38 -1.77
Beta 1.08 1.05
Sharpe Ratio 0.76 0.26
Treynor Ratio 11.34 2.92

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

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

XLI’s Mean Return is 0.72 points higher than that of EFV and its R-squared is 13.18 points lower. With a Standard Deviation of 17.13, XLI is slightly more volatile than EFV. The Alpha and Beta of XLI are 4.15 points higher and 0.03 points higher than EFV’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. EFV - Annual Returns

Year XLI EFV
2020 11.0% -2.78%
2019 29.11% 15.97%
2018 -13.1% -14.88%
2017 23.85% 21.22%
2016 19.93% 4.87%
2015 -4.27% -5.89%
2014 10.44% -5.65%
2013 40.44% 22.61%
2012 14.86% 17.52%
2011 -1.01% -12.24%
2010 27.62% 3.18%

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 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

XLI vs. EFV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLI $10,000 $39,853 14.44%
EFV $10,000 $14,134 3.99%

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 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%.

XLI’s CAGR is 10.45 percentage points higher than that of EFV and as a result, would have yielded $25,719 more on a $10,000 investment. Thus, XLI outperformed EFV by 10.45% annually.


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