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XLK vs. EFV: What’s The Difference?

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

The expense ratio of XLK is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%). XLK also has a higher exposure to the technology sector and a lower standard deviation. Overall, XLK has provided higher returns than EFV over the past ten years.

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

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Summary

XLKEFV
NameTechnology Select Sector SPDR FundiShares MSCI EAFE Value ETF
CategoryTechnologyForeign Large Value
IssuerSPDR State Street Global AdvisorsiShares
AUM42.3B14.37B
Avg. Return20.02%3.99%
Div. Yield0.73%2.94%
Expense Ratio0.12%0.39%

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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.

XLK’s dividend yield is 2.21% lower than that of EFV (0.73% vs. 2.94%). Also, XLK yielded on average 16.03% more per year over the past decade (20.02% vs. 3.99%). The expense ratio of XLK is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%).

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Fund Composition

Industry Exposure

XLK vs. EFV - Industry Exposure

XLKEFV
Technology87.54%2.98%
Industrials1.75%11.6%
Energy0.0%6.6%
Communication Services0.0%6.46%
Utilities0.0%6.14%
Healthcare0.0%9.19%
Consumer Defensive0.0%6.82%
Real Estate0.0%5.06%
Financial Services10.71%26.55%
Consumer Cyclical0.0%9.0%
Basic Materials0.0%9.59%

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 EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.

EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.

XLK is 84.56% more exposed to the Technology sector than EFV (87.54% vs 2.98%). XLK’s exposure to Financial Services and Industrials stocks is 15.84% lower and 9.85% lower respectively (10.71% vs. 26.55% and 1.75% vs. 11.6%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.88% less of the fund’s holdings compared to EFV (0.00% vs. 20.88%).

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%.

EFV - Holdings

EFV HoldingsWeight
Novartis AG2.41%
Toyota Motor Corp2.21%
Commonwealth Bank of Australia1.59%
Siemens AG1.45%
Sanofi SA1.42%
HSBC Holdings PLC1.4%
TotalEnergies SE1.35%
Allianz SE1.23%
GlaxoSmithKline PLC1.18%
Rio Tinto PLC1.1%

EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.

HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.

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Risk Analysis

XLKEFV
Mean Return1.70.42
R-squared73.5692.15
Std. Deviation15.5816.53
Alpha10.43-1.77
Beta0.951.05
Sharpe Ratio1.270.26
Treynor Ratio21.442.92

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 Treynor Ratio is 21.44 while XLK’s R-squared is 73.56. Furthermore, the fund has a Alpha of 10.43 and a Standard Deviation of 15.58.

The iShares MSCI EAFE Value ETF (EFV) has a Alpha of -1.77 with a Sharpe Ratio of 0.26 and a Treynor Ratio of 2.92. Its R-squared is 92.15 while EFV’s Mean Return is 0.42. Furthermore, the fund has a Beta of 1.05 and a Standard Deviation of 16.53.

XLK’s Mean Return is 1.28 points higher than that of EFV and its R-squared is 18.59 points lower. With a Standard Deviation of 15.58, XLK is slightly less volatile than EFV. The Alpha and Beta of XLK are 12.20 points higher and 0.10 points lower than EFV’s Alpha and Beta.

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Performance

Annual Returns

XLK vs. EFV - Annual Returns

YearXLKEFV
202043.67%-2.78%
201949.97%15.97%
2018-1.56%-14.88%
201734.27%21.22%
201614.81%4.87%
20155.62%-5.89%
201417.75%-5.65%
201325.98%22.61%
201215.47%17.52%
20112.69%-12.24%
201011.6%3.18%

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 EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.

Portfolio Growth

XLK vs. EFV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLK$10,000$67,79020.02%
EFV$10,000$14,1343.99%

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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.

XLK’s CAGR is 16.03 percentage points higher than that of EFV and as a result, would have yielded $53,656 more on a $10,000 investment. Thus, XLK outperformed EFV by 16.03% annually.


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