Skip to content

XLK vs. DGRO: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and DGRO is a iShares Large Value fund. So, what’s the difference between XLK and DGRO? And which fund is better?

The expense ratio of XLK is 0.04 percentage points higher than DGRO’s (0.12% vs. 0.08%). XLK also has a higher exposure to the technology sector and a higher standard deviation. Overall, XLK has provided higher returns than DGRO over the past ten years.

In this article, we’ll compare XLK vs. DGRO. We’ll look at fund composition and industry exposure, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss XLK’s and DGRO’s holdings, annual returns, and performance 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

XLKDGRO
NameTechnology Select Sector SPDR FundiShares Core Dividend Growth ETF
CategoryTechnologyLarge Value
IssuerSPDR State Street Global AdvisorsiShares
AUM42.3B20B
Avg. Return20.02%12.46%
Div. Yield0.73%2.04%
Expense Ratio0.12%0.08%

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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

XLK’s dividend yield is 1.31% lower than that of DGRO (0.73% vs. 2.04%). Also, XLK yielded on average 7.57% more per year over the past decade (20.02% vs. 12.46%). The expense ratio of XLK is 0.04 percentage points higher than DGRO’s (0.12% vs. 0.08%).

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

XLK vs. DGRO - Industry Exposure

XLKDGRO
Technology87.54%18.98%
Industrials1.75%12.52%
Energy0.0%0.11%
Communication Services0.0%4.53%
Utilities0.0%7.34%
Healthcare0.0%17.55%
Consumer Defensive0.0%10.24%
Real Estate0.0%0.0%
Financial Services10.71%18.47%
Consumer Cyclical0.0%7.42%
Basic Materials0.0%2.83%

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 Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

XLK is 68.56% more exposed to the Technology sector than DGRO (87.54% vs 18.98%). XLK’s exposure to Financial Services and Industrials stocks is 7.76% lower and 10.77% lower respectively (10.71% vs. 18.47% and 1.75% vs. 12.52%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 17.66% less of the fund’s holdings compared to DGRO (0.00% vs. 17.66%).

Holdings

XLK - Holdings

XLK HoldingsWeight
Apple Inc21.45%
Microsoft Corp20.37%
NVIDIA Corp4.98%
Visa Inc Class A3.95%
PayPal Holdings Inc3.42%
Mastercard Inc A3.19%
Adobe Inc2.8%
Salesforce.com Inc2.26%
Intel Corp2.26%
Cisco Systems Inc2.23%

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%.

DGRO - Holdings

DGRO HoldingsWeight
Microsoft Corp3.29%
Apple Inc3.26%
Pfizer Inc2.89%
Johnson & Johnson2.87%
Procter & Gamble Co2.79%
Verizon Communications Inc2.68%
JPMorgan Chase & Co2.57%
The Home Depot Inc2.35%
Merck & Co Inc2.11%
Cisco Systems Inc1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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

XLKDGRO
Mean Return1.70
R-squared73.560
Std. Deviation15.580
Alpha10.430
Beta0.950
Sharpe Ratio1.270
Treynor Ratio21.440

The Technology Select Sector SPDR Fund (XLK) has a Treynor Ratio of 21.44 with a R-squared of 73.56 and a Sharpe Ratio of 1.27. Its Mean Return is 1.7 while XLK’s Standard Deviation is 15.58. Furthermore, the fund has a Beta of 0.95 and a Alpha of 10.43.

The iShares Core Dividend Growth ETF (DGRO) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Mean Return of 0. Its Treynor Ratio is 0 while DGRO’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a R-squared of 0.

XLK’s Mean Return is 1.70 points higher than that of DGRO and its R-squared is 73.56 points higher. With a Standard Deviation of 15.58, XLK is slightly more volatile than DGRO. The Alpha and Beta of XLK are 10.43 points higher and 0.95 points higher than DGRO’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

XLK vs. DGRO - Annual Returns

YearXLKDGRO
202043.67%9.47%
201949.97%30.02%
2018-1.56%-2.24%
201734.27%22.84%
201614.81%15.27%
20155.62%-0.62%
201417.75%0.0%
201325.98%0.0%
201215.47%0.0%
20112.69%0.0%
201011.6%0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

XLK vs. DGRO - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLK$10,000$34,53420.02%
DGRO$10,000$19,58012.46%

A $10,000 investment in XLK would have resulted in a final balance of $34,534. This is a profit of $24,534 over 6 years and amounts to a compound annual growth rate (CAGR) of 20.02%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

XLK’s CAGR is 7.57 percentage points higher than that of DGRO and as a result, would have yielded $14,954 more on a $10,000 investment. Thus, XLK outperformed DGRO by 7.57% 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.