XLI vs. IUSB: What’s The Difference?

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

The expense ratio of XLI is 0.06 percentage points higher than IUSB’s (0.12% vs. 0.06%). XLI also has a high exposure to the industrials sector while IUSB is mostly comprised of AAA bonds. Overall, XLI has provided higher returns than IUSB over the past 6 years.

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

Summary

XLI IUSB
Name Industrial Select Sector SPDR Fund iShares Core Total USD Bond Market ETF
Category Industrials N/A
Issuer SPDR State Street Global Advisors iShares
AUM 19.33B 14.49B
Avg. Return 14.44% 4.13%
Div. Yield 1.25% 2.1%
Expense Ratio 0.12% 0.06%

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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

XLI’s dividend yield is 0.85% lower than that of IUSB (1.25% vs. 2.1%). Also, XLI yielded on average 10.31% more per year over the past decade (14.44% vs. 4.13%). The expense ratio of XLI is 0.06 percentage points higher than IUSB’s (0.12% vs. 0.06%).

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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%.

IUSB - Holdings

IUSB Bond Sectors Weight
AAA 58.32%
BBB 16.98%
A 12.27%
BB 4.33%
AA 3.36%
B 2.8%
Others 1.01%
Below B 0.92%
US Government 0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

XLI IUSB
Mean Return 1.14 0
R-squared 78.97 0
Std. Deviation 17.13 0
Alpha 2.38 0
Beta 1.08 0
Sharpe Ratio 0.76 0
Treynor Ratio 11.34 0

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

The iShares Core Total USD Bond Market ETF (IUSB) has a Mean Return of 0 with a Alpha of 0 and a R-squared of 0. Its Beta is 0 while IUSB’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.

XLI’s Mean Return is 1.14 points higher than that of IUSB and its R-squared is 78.97 points higher. With a Standard Deviation of 17.13, XLI is slightly more volatile than IUSB. The Alpha and Beta of XLI are 2.38 points higher and 1.08 points higher than IUSB’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. IUSB - Annual Returns

Year XLI IUSB
2020 11.0% 7.59%
2019 29.11% 9.26%
2018 -13.1% -0.38%
2017 23.85% 4.06%
2016 19.93% 3.78%
2015 -4.27% 0.46%
2014 10.44% 0.0%
2013 40.44% 0.0%
2012 14.86% 0.0%
2011 -1.01% 0.0%
2010 27.62% 0.0%

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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

XLI vs. IUSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLI $10,000 $17,708 14.44%
IUSB $10,000 $12,704 4.13%

A $10,000 investment in XLI would have resulted in a final balance of $17,708. This is a profit of $7,708 over 6 years and amounts to a compound annual growth rate (CAGR) of 14.44%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

XLI’s CAGR is 10.31 percentage points higher than that of IUSB and as a result, would have yielded $5,004 more on a $10,000 investment. Thus, XLI outperformed IUSB by 10.31% annually.


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