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XLI vs. IWS: What’s The Difference?

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

The expense ratio of XLI is 0.11 percentage points lower than IWS’s (0.12% vs. 0.23%). XLI also has a higher exposure to the industrials sector and a higher standard deviation. Overall, XLI has provided higher returns than IWS over the past 11 years.

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

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Summary

XLIIWS
NameIndustrial Select Sector SPDR FundiShares Russell Mid-Cap Value ETF
CategoryIndustrialsMid-Cap Value
IssuerSPDR State Street Global AdvisorsiShares
AUM19.33B14.24B
Avg. Return14.44%12.35%
Div. Yield1.25%1.34%
Expense Ratio0.12%0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

XLI’s dividend yield is 0.09% lower than that of IWS (1.25% vs. 1.34%). Also, XLI yielded on average 2.10% more per year over the past decade (14.44% vs. 12.35%). The expense ratio of XLI is 0.11 percentage points lower than IWS’s (0.12% vs. 0.23%).

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Fund Composition

Industry Exposure

XLI vs. IWS - Industry Exposure

XLIIWS
Technology1.82%11.39%
Industrials97.49%14.6%
Energy0.0%4.71%
Communication Services0.0%4.08%
Utilities0.0%6.97%
Healthcare0.0%8.56%
Consumer Defensive0.0%4.76%
Real Estate0.0%11.71%
Financial Services0.0%15.75%
Consumer Cyclical0.69%12.07%
Basic Materials0.0%5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

XLI is 82.89% more exposed to the Industrials sector than IWS (97.49% vs 14.6%). XLI’s exposure to Technology and Consumer Cyclical stocks is 9.57% lower and 11.38% lower respectively (1.82% vs. 11.39% and 0.69% vs. 12.07%). In total, Financial Services, Real Estate, and Consumer Defensive also make up 32.22% less of the fund’s holdings compared to IWS (0.00% vs. 32.22%).

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

XLIIWS
Mean Return1.141.06
R-squared78.9787.04
Std. Deviation17.1316.03
Alpha2.38-4.11
Beta1.081.1
Sharpe Ratio0.760.75
Treynor Ratio11.3410.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Standard Deviation of 16.03 with a Beta of 1.1 and a R-squared of 87.04. Its Alpha is -4.11 while IWS’s Mean Return is 1.06. Furthermore, the fund has a Treynor Ratio of 10.3 and a Sharpe Ratio of 0.75.

XLI’s Mean Return is 0.08 points higher than that of IWS and its R-squared is 8.07 points lower. With a Standard Deviation of 17.13, XLI is slightly more volatile than IWS. The Alpha and Beta of XLI are 6.49 points higher and 0.02 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. IWS - Annual Returns

YearXLIIWS
202011.0%4.76%
201929.11%26.78%
2018-13.1%-12.36%
201723.85%13.1%
201619.93%19.69%
2015-4.27%-4.93%
201410.44%14.49%
201340.44%33.11%
201214.86%18.27%
2011-1.01%-1.55%
201027.62%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

XLI vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLI$10,000$39,85314.44%
IWS$10,000$33,08312.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

XLI’s CAGR is 2.10 percentage points higher than that of IWS and as a result, would have yielded $6,770 more on a $10,000 investment. Thus, XLI outperformed IWS by 2.10% annually.


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