The Technology Select Sector SPDR Fund (XLK) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between XLK and DIA? And which fund is better?
The expense ratio of XLK is 0.04 percentage points lower than DIA’s (0.12% vs. 0.16%). XLK also has a higher exposure to the technology sector and a higher standard deviation. Overall, XLK has provided higher returns than DIA over the past ten years.
In this article, we’ll compare XLK vs. DIA. We’ll look at performance and annual returns, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss XLK’s and DIA’s portfolio growth, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| XLK | DIA | |
| Name | Technology Select Sector SPDR Fund | SPDR Dow Jones Industrial Average ETF Trust |
| Category | Technology | Large Value |
| Issuer | SPDR State Street Global Advisors | SPDR State Street Global Advisors |
| AUM | 42.3B | 30.46B |
| Avg. Return | 20.02% | 13.35% |
| Div. Yield | 0.73% | 1.61% |
| Expense Ratio | 0.12% | 0.16% |
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 SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.
XLK’s dividend yield is 0.88% lower than that of DIA (0.73% vs. 1.61%). Also, XLK yielded on average 6.67% more per year over the past decade (20.02% vs. 13.35%). The expense ratio of XLK is 0.04 percentage points lower than DIA’s (0.12% vs. 0.16%).
Fund Composition
Industry Exposure
| XLK | DIA | |
| Technology | 87.54% | 17.32% |
| Industrials | 1.75% | 16.7% |
| Energy | 0.0% | 2.0% |
| Communication Services | 0.0% | 4.42% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 0.0% | 17.92% |
| Consumer Defensive | 0.0% | 6.3% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 10.71% | 20.68% |
| Consumer Cyclical | 0.0% | 13.44% |
| Basic Materials | 0.0% | 1.21% |
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 SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.
DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.
XLK is 70.22% more exposed to the Technology sector than DIA (87.54% vs 17.32%). XLK’s exposure to Financial Services and Industrials stocks is 9.97% lower and 14.95% lower respectively (10.71% vs. 20.68% and 1.75% vs. 16.7%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 19.74% less of the fund’s holdings compared to DIA (0.00% vs. 19.74%).
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%.
| DIA Holdings | Weight |
| UnitedHealth Group Inc | 7.63% |
| Goldman Sachs Group Inc | 7.23% |
| The Home Depot Inc | 6.07% |
| Microsoft Corp | 5.16% |
| Salesforce.com Inc | 4.65% |
| Amgen Inc | 4.64% |
| Boeing Co | 4.56% |
| Visa Inc Class A | 4.45% |
| McDonald’s Corp | 4.4% |
| Honeywell International Inc | 4.18% |
DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.
Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.
Risk Analysis
| XLK | DIA | |
| Mean Return | 1.7 | 1.13 |
| R-squared | 73.56 | 93.31 |
| Std. Deviation | 15.58 | 13.68 |
| Alpha | 10.43 | -0.94 |
| Beta | 0.95 | 0.97 |
| Sharpe Ratio | 1.27 | 0.94 |
| Treynor Ratio | 21.44 | 13.07 |
The Technology Select Sector SPDR Fund (XLK) has a R-squared of 73.56 with a Mean Return of 1.7 and a Sharpe Ratio of 1.27. Its Standard Deviation is 15.58 while XLK’s Alpha is 10.43. Furthermore, the fund has a Beta of 0.95 and a Treynor Ratio of 21.44.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Mean Return of 1.13 with a Sharpe Ratio of 0.94 and a Beta of 0.97. Its Treynor Ratio is 13.07 while DIA’s Alpha is -0.94. Furthermore, the fund has a R-squared of 93.31 and a Standard Deviation of 13.68.
XLK’s Mean Return is 0.57 points higher than that of DIA and its R-squared is 19.75 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than DIA. The Alpha and Beta of XLK are 11.37 points higher and 0.02 points lower than DIA’s Alpha and Beta.
Performance
Annual Returns
| Year | XLK | DIA |
| 2020 | 43.67% | 9.63% |
| 2019 | 49.97% | 25.09% |
| 2018 | -1.56% | -3.6% |
| 2017 | 34.27% | 27.97% |
| 2016 | 14.81% | 16.28% |
| 2015 | 5.62% | 0.1% |
| 2014 | 17.75% | 9.88% |
| 2013 | 25.98% | 29.41% |
| 2012 | 15.47% | 10.04% |
| 2011 | 2.69% | 8.21% |
| 2010 | 11.6% | 13.87% |
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 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLK | $10,000 | $67,790 | 20.02% |
| DIA | $10,000 | $37,965 | 13.35% |
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 DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.
XLK’s CAGR is 6.67 percentage points higher than that of DIA and as a result, would have yielded $29,825 more on a $10,000 investment. Thus, XLK outperformed DIA by 6.67% annually.
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