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XLI vs. IWP: What’s The Difference?

The Industrial Select Sector SPDR Fund (XLI) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. XLI is a SPDR State Street Global Advisors Industrials fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between XLI and IWP? And which fund is better?

The expense ratio of XLI is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%). XLI also has a higher exposure to the industrials sector and a higher standard deviation. Overall, XLI has provided lower returns than IWP over the past 11 years.

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

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Summary

XLIIWP
NameIndustrial Select Sector SPDR FundiShares Russell Mid-Cap Growth ETF
CategoryIndustrialsMid-Cap Growth
IssuerSPDR State Street Global AdvisorsiShares
AUM19.33B15.7B
Avg. Return14.44%16.75%
Div. Yield1.25%0.26%
Expense Ratio0.12%0.24%

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 Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

XLI’s dividend yield is 0.99% higher than that of IWP (1.25% vs. 0.26%). Also, XLI yielded on average 2.31% less per year over the past decade (14.44% vs. 16.75%). The expense ratio of XLI is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%).

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Fund Composition

Industry Exposure

XLI vs. IWP - Industry Exposure

XLIIWP
Technology1.82%33.88%
Industrials97.49%14.09%
Energy0.0%1.51%
Communication Services0.0%6.32%
Utilities0.0%0.16%
Healthcare0.0%16.79%
Consumer Defensive0.0%2.32%
Real Estate0.0%2.46%
Financial Services0.0%4.52%
Consumer Cyclical0.69%16.09%
Basic Materials0.0%1.86%

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 Russell Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

XLI is 83.40% more exposed to the Industrials sector than IWP (97.49% vs 14.09%). XLI’s exposure to Technology and Consumer Cyclical stocks is 32.06% lower and 15.40% lower respectively (1.82% vs. 33.88% and 0.69% vs. 16.09%). In total, Financial Services, Real Estate, and Consumer Defensive also make up 9.30% less of the fund’s holdings compared to IWP (0.00% vs. 9.30%).

Holdings

XLI - Holdings

XLI HoldingsWeight
Honeywell International Inc4.9%
United Parcel Service Inc Class B4.84%
Union Pacific Corp4.7%
Boeing Co4.24%
Raytheon Technologies Corp4.16%
Caterpillar Inc3.84%
General Electric Co3.8%
3M Co3.7%
Deere & Co3.54%
Lockheed Martin Corp2.98%

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%.

IWP - Holdings

IWP HoldingsWeight
IDEXX Laboratories Inc1.3%
DocuSign Inc1.3%
Roku Inc Class A1.29%
Match Group Inc1.06%
Chipotle Mexican Grill Inc1.06%
Pinterest Inc1.05%
Veeva Systems Inc Class A1.04%
Palantir Technologies Inc Ordinary Shares – Class A1.04%
Lululemon Athletica Inc1.01%
DexCom Inc1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

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Risk Analysis

XLIIWP
Mean Return1.141.27
R-squared78.9787.01
Std. Deviation17.1316.05
Alpha2.38-1.03
Beta1.081.1
Sharpe Ratio0.760.91
Treynor Ratio11.3412.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Mean Return of 1.27 with a Alpha of -1.03 and a Treynor Ratio of 12.98. Its Sharpe Ratio is 0.91 while IWP’s Beta is 1.1. Furthermore, the fund has a R-squared of 87.01 and a Standard Deviation of 16.05.

XLI’s Mean Return is 0.13 points lower than that of IWP and its R-squared is 8.04 points lower. With a Standard Deviation of 17.13, XLI is slightly more volatile than IWP. The Alpha and Beta of XLI are 3.41 points higher and 0.02 points lower than IWP’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. IWP - Annual Returns

YearXLIIWP
202011.0%35.29%
201929.11%35.14%
2018-13.1%-4.95%
201723.85%24.98%
201619.93%7.15%
2015-4.27%-0.39%
201410.44%11.68%
201340.44%35.44%
201214.86%15.62%
2011-1.01%-1.82%
201027.62%26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

XLI vs. IWP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLI$10,000$39,85314.44%
IWP$10,000$50,19116.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

XLI’s CAGR is 2.31 percentage points lower than that of IWP and as a result, would have yielded $10,338 less on a $10,000 investment. Thus, XLI performed worse than IWP by 2.31% annually.


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