XLI vs. XLC: What’s The Difference?

The Industrial Select Sector SPDR Fund (XLI) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. XLI is a SPDR State Street Global Advisors Industrials fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between XLI and XLC? And which fund is better?

XLI and XLC have the same expense ratio: 0.12%. XLI also has a higher exposure to the industrials sector and a higher standard deviation. Overall, XLI has provided lower returns than XLC over the past 2 years.

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

Summary

XLI XLC
Name Industrial Select Sector SPDR Fund Communication Services Select Sector SPDR Fund
Category Industrials Communications
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 19.33B 14.09B
Avg. Return 14.44% 29.04%
Div. Yield 1.25% 0.62%
Expense Ratio 0.12% 0.12%

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 Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.

XLI’s dividend yield is 0.63% higher than that of XLC (1.25% vs. 0.62%). Also, XLI yielded on average 14.59% less per year over the past decade (14.44% vs. 29.04%). XLI and XLC have the same expense ratio: 0.12%.

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Fund Composition

Industry Exposure

XLI vs. XLC - Industry Exposure

XLI XLC
Technology 1.82% 0.0%
Industrials 97.49% 0.0%
Energy 0.0% 0.0%
Communication Services 0.0% 100.0%
Utilities 0.0% 0.0%
Healthcare 0.0% 0.0%
Consumer Defensive 0.0% 0.0%
Real Estate 0.0% 0.0%
Financial Services 0.0% 0.0%
Consumer Cyclical 0.69% 0.0%
Basic Materials 0.0% 0.0%

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 Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

XLI is 97.49% more exposed to the Industrials sector than XLC (97.49% vs 0.0%). XLI’s exposure to Technology and Consumer Cyclical stocks is 1.82% higher and 0.69% higher respectively (1.82% vs. 0.0% and 0.69% vs. 0.0%). In total, Financial Services, Real Estate, and Consumer Defensive also make up 0.00% less of the fund’s holdings compared to XLC (0.00% vs. 0.00%).

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%.

XLC - Holdings

XLC Holdings Weight
Facebook Inc A 23.75%
Alphabet Inc A 11.49%
Alphabet Inc Class C 11.16%
Netflix Inc 4.78%
Charter Communications Inc A 4.65%
Comcast Corp Class A 4.44%
T-Mobile US Inc 4.41%
The Walt Disney Co 4.39%
AT&T Inc 4.35%
Verizon Communications Inc 4.33%

XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.

Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.

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Risk Analysis

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

The Communication Services Select Sector SPDR Fund (XLC) has a R-squared of 0 with a Standard Deviation of 0 and a Sharpe Ratio of 0. Its Beta is 0 while XLC’s Mean Return 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 XLC and its R-squared is 78.97 points higher. With a Standard Deviation of 17.13, XLI is slightly more volatile than XLC. The Alpha and Beta of XLI are 2.38 points higher and 1.08 points higher than XLC’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. XLC - Annual Returns

Year XLI XLC
2020 11.0% 26.85%
2019 29.11% 31.22%
2018 -13.1% 0.0%
2017 23.85% 0.0%
2016 19.93% 0.0%
2015 -4.27% 0.0%
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 XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

XLI vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLI $10,000 $14,331 14.44%
XLC $10,000 $16,645 29.04%

A $10,000 investment in XLI would have resulted in a final balance of $14,331. This is a profit of $4,331 over 2 years and amounts to a compound annual growth rate (CAGR) of 14.44%.

With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.

XLI’s CAGR is 14.59 percentage points lower than that of XLC and as a result, would have yielded $2,314 less on a $10,000 investment. Thus, XLI performed worse than XLC by 14.59% annually.


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