XLI vs. MTUM: What’s The Difference?

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

The expense ratio of XLI is 0.03 percentage points lower than MTUM’s (0.12% vs. 0.15%). XLI also has a higher exposure to the industrials sector and a higher standard deviation. Overall, XLI has provided lower returns than MTUM over the past 7 years.

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

Summary

XLI MTUM
Name Industrial Select Sector SPDR Fund iShares MSCI USA Momentum Factor ETF
Category Industrials Large Growth
Issuer SPDR State Street Global Advisors iShares
AUM 19.33B 14.53B
Avg. Return 14.44% 17.37%
Div. Yield 1.25% 0.44%
Expense Ratio 0.12% 0.15%

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 USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

XLI’s dividend yield is 0.81% higher than that of MTUM (1.25% vs. 0.44%). Also, XLI yielded on average 2.93% less per year over the past decade (14.44% vs. 17.37%). The expense ratio of XLI is 0.03 percentage points lower than MTUM’s (0.12% vs. 0.15%).

Fund Composition

Industry Exposure

XLI vs. MTUM - Industry Exposure

XLI MTUM
Technology 1.82% 15.24%
Industrials 97.49% 12.47%
Energy 0.0% 1.77%
Communication Services 0.0% 13.18%
Utilities 0.0% 0.19%
Healthcare 0.0% 6.41%
Consumer Defensive 0.0% 2.88%
Real Estate 0.0% 0.43%
Financial Services 0.0% 34.32%
Consumer Cyclical 0.69% 9.96%
Basic Materials 0.0% 3.15%

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 USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

XLI is 85.02% more exposed to the Industrials sector than MTUM (97.49% vs 12.47%). XLI’s exposure to Technology and Consumer Cyclical stocks is 13.42% lower and 9.27% lower respectively (1.82% vs. 15.24% and 0.69% vs. 9.96%). In total, Financial Services, Real Estate, and Consumer Defensive also make up 37.63% less of the fund’s holdings compared to MTUM (0.00% vs. 37.63%).

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%.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

Risk Analysis

XLI MTUM
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 R-squared of 78.97 with a Beta of 1.08 and a Alpha of 2.38. Its Treynor Ratio is 11.34 while XLI’s Standard Deviation is 17.13. Furthermore, the fund has a Sharpe Ratio of 0.76 and a Mean Return of 1.14.

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Mean Return of 0 with a Standard Deviation of 0 and a Beta of 0. Its Sharpe Ratio is 0 while MTUM’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Treynor Ratio of 0.

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

Performance

Annual Returns

XLI vs. MTUM - Annual Returns

Year XLI MTUM
2020 11.0% 29.69%
2019 29.11% 27.57%
2018 -13.1% -1.77%
2017 23.85% 37.6%
2016 19.93% 4.89%
2015 -4.27% 9.12%
2014 10.44% 14.48%
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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

XLI vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLI $10,000 $19,556 14.44%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in XLI would have resulted in a final balance of $19,556. This is a profit of $9,556 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.44%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

XLI’s CAGR is 2.93 percentage points lower than that of MTUM and as a result, would have yielded $9,745 less on a $10,000 investment. Thus, XLI performed worse than MTUM by 2.93% annually.


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