Skip to content

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.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

XLIXLC
NameIndustrial Select Sector SPDR FundCommunication Services Select Sector SPDR Fund
CategoryIndustrialsCommunications
IssuerSPDR State Street Global AdvisorsSPDR State Street Global Advisors
AUM19.33B14.09B
Avg. Return14.44%29.04%
Div. Yield1.25%0.62%
Expense Ratio0.12%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%.

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

XLI vs. XLC - Industry Exposure

XLIXLC
Technology1.82%0.0%
Industrials97.49%0.0%
Energy0.0%0.0%
Communication Services0.0%100.0%
Utilities0.0%0.0%
Healthcare0.0%0.0%
Consumer Defensive0.0%0.0%
Real Estate0.0%0.0%
Financial Services0.0%0.0%
Consumer Cyclical0.69%0.0%
Basic Materials0.0%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 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%.

XLC - Holdings

XLC HoldingsWeight
Facebook Inc A23.75%
Alphabet Inc A11.49%
Alphabet Inc Class C11.16%
Netflix Inc4.78%
Charter Communications Inc A4.65%
Comcast Corp Class A4.44%
T-Mobile US Inc4.41%
The Walt Disney Co4.39%
AT&T Inc4.35%
Verizon Communications Inc4.33%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

XLIXLC
Mean Return1.140
R-squared78.970
Std. Deviation17.130
Alpha2.380
Beta1.080
Sharpe Ratio0.760
Treynor Ratio11.340

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.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

XLI vs. XLC - Annual Returns

YearXLIXLC
202011.0%26.85%
201929.11%31.22%
2018-13.1%0.0%
201723.85%0.0%
201619.93%0.0%
2015-4.27%0.0%
201410.44%0.0%
201340.44%0.0%
201214.86%0.0%
2011-1.01%0.0%
201027.62%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

FundInitial BalanceFinal BalanceCAGR
XLI$10,000$14,33114.44%
XLC$10,000$16,64529.04%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published. Required fields are marked *