The Technology Select Sector SPDR Fund (XLK) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and ACWI is a iShares N/A fund. So, what’s the difference between XLK and ACWI? And which fund is better?
The expense ratio of XLK is 0.20 percentage points lower than ACWI’s (0.12% vs. 0.32%). XLK also has a higher exposure to the technology sector and a higher standard deviation. Overall, XLK has provided higher returns than ACWI over the past ten years.
In this article, we’ll compare XLK vs. ACWI. We’ll look at performance and holdings, as well as at their annual returns and fund composition. Moreover, I’ll also discuss XLK’s and ACWI’s portfolio growth, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| XLK | ACWI | |
| Name | Technology Select Sector SPDR Fund | iShares MSCI ACWI ETF |
| Category | Technology | N/A |
| Issuer | SPDR State Street Global Advisors | iShares |
| AUM | 42.3B | 16.85B |
| Avg. Return | 20.02% | 10.21% |
| Div. Yield | 0.73% | 1.39% |
| Expense Ratio | 0.12% | 0.32% |
The Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% with an expense ratio of 0.12%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
XLK’s dividend yield is 0.66% lower than that of ACWI (0.73% vs. 1.39%). Also, XLK yielded on average 9.81% more per year over the past decade (20.02% vs. 10.21%). The expense ratio of XLK is 0.20 percentage points lower than ACWI’s (0.12% vs. 0.32%).
Fund Composition
Industry Exposure
| XLK | ACWI | |
| Technology | 87.54% | 20.41% |
| Industrials | 1.75% | 9.65% |
| Energy | 0.0% | 3.48% |
| Communication Services | 0.0% | 9.87% |
| Utilities | 0.0% | 2.61% |
| Healthcare | 0.0% | 11.74% |
| Consumer Defensive | 0.0% | 7.15% |
| Real Estate | 0.0% | 2.75% |
| Financial Services | 10.71% | 15.58% |
| Consumer Cyclical | 0.0% | 12.01% |
| Basic Materials | 0.0% | 4.73% |
The Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 87.54%. This is followed by Financial Services and Industrials at 10.71% and 1.75% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLK’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 1.75%.
The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
XLK is 67.13% more exposed to the Technology sector than ACWI (87.54% vs 20.41%). XLK’s exposure to Financial Services and Industrials stocks is 4.87% lower and 7.90% lower respectively (10.71% vs. 15.58% and 1.75% vs. 9.65%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.91% less of the fund’s holdings compared to ACWI (0.00% vs. 21.91%).
Holdings
| XLK Holdings | Weight |
| Apple Inc | 21.45% |
| Microsoft Corp | 20.37% |
| NVIDIA Corp | 4.98% |
| Visa Inc Class A | 3.95% |
| PayPal Holdings Inc | 3.42% |
| Mastercard Inc A | 3.19% |
| Adobe Inc | 2.8% |
| Salesforce.com Inc | 2.26% |
| Intel Corp | 2.26% |
| Cisco Systems Inc | 2.23% |
XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.
Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.
| ACWI Holdings | Weight |
| Apple Inc | 3.44% |
| Microsoft Corp | 2.91% |
| Amazon.com Inc | 2.21% |
| Facebook Inc A | 1.25% |
| Alphabet Inc Class C | 1.12% |
| Alphabet Inc A | 1.09% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.79% |
| Tesla Inc | 0.78% |
| NVIDIA Corp | 0.74% |
| JPMorgan Chase & Co | 0.71% |
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
Risk Analysis
| XLK | ACWI | |
| Mean Return | 1.7 | 0.89 |
| R-squared | 73.56 | 99.96 |
| Std. Deviation | 15.58 | 14.05 |
| Alpha | 10.43 | 0.15 |
| Beta | 0.95 | 1 |
| Sharpe Ratio | 1.27 | 0.71 |
| Treynor Ratio | 21.44 | 9.45 |
The Technology Select Sector SPDR Fund (XLK) has a Beta of 0.95 with a Mean Return of 1.7 and a Sharpe Ratio of 1.27. Its R-squared is 73.56 while XLK’s Standard Deviation is 15.58. Furthermore, the fund has a Alpha of 10.43 and a Treynor Ratio of 21.44.
The iShares MSCI ACWI ETF (ACWI) has a Alpha of 0.15 with a Beta of 1 and a Standard Deviation of 14.05. Its Treynor Ratio is 9.45 while ACWI’s R-squared is 99.96. Furthermore, the fund has a Mean Return of 0.89 and a Sharpe Ratio of 0.71.
XLK’s Mean Return is 0.81 points higher than that of ACWI and its R-squared is 26.40 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than ACWI. The Alpha and Beta of XLK are 10.28 points higher and 0.05 points lower than ACWI’s Alpha and Beta.
Performance
Annual Returns
| Year | XLK | ACWI |
| 2020 | 43.67% | 16.38% |
| 2019 | 49.97% | 26.7% |
| 2018 | -1.56% | -9.15% |
| 2017 | 34.27% | 24.35% |
| 2016 | 14.81% | 8.22% |
| 2015 | 5.62% | -2.39% |
| 2014 | 17.75% | 4.64% |
| 2013 | 25.98% | 22.91% |
| 2012 | 15.47% | 15.99% |
| 2011 | 2.69% | -7.6% |
| 2010 | 11.6% | 12.31% |
XLK had its best year in 2019 with an annual return of 49.97%. XLK’s worst year over the past decade yielded -1.56% and occurred in 2018. In most years the Technology Select Sector SPDR Fund provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 14.81%, 15.47%, and 17.75% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLK | $10,000 | $67,790 | 20.02% |
| ACWI | $10,000 | $27,241 | 10.21% |
A $10,000 investment in XLK would have resulted in a final balance of $67,790. This is a profit of $57,790 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.02%.
With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.
XLK’s CAGR is 9.81 percentage points higher than that of ACWI and as a result, would have yielded $40,549 more on a $10,000 investment. Thus, XLK outperformed ACWI by 9.81% annually.
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