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XLK vs. IAU: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and IAU is a iShares N/A fund. So, what’s the difference between XLK and IAU? And which fund is better?

The expense ratio of XLK is 0.13 percentage points lower than IAU’s (0.12% vs. 0.25%). XLK also has a higher exposure to the technology sector and a lower standard deviation. Overall, XLK has provided higher returns than IAU over the past ten years.

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

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Summary

XLKIAU
NameTechnology Select Sector SPDR FundiShares Gold Trust
CategoryTechnologyN/A
IssuerSPDR State Street Global AdvisorsiShares
AUM42.3B28.61B
Avg. Return20.02%6.03%
Div. Yield0.73%0.0%
Expense Ratio0.12%0.25%

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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

XLK’s dividend yield is 0.73% higher than that of IAU (0.73% vs. 0.0%). Also, XLK yielded on average 13.99% more per year over the past decade (20.02% vs. 6.03%). The expense ratio of XLK is 0.13 percentage points lower than IAU’s (0.12% vs. 0.25%).

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Fund Composition

Industry Exposure

XLK vs. IAU - Industry Exposure

XLKIAU
Technology87.54%0.0%
Industrials1.75%0.0%
Energy0.0%0.0%
Communication Services0.0%0.0%
Utilities0.0%0.0%
Healthcare0.0%0.0%
Consumer Defensive0.0%0.0%
Real Estate0.0%0.0%
Financial Services10.71%0.0%
Consumer Cyclical0.0%0.0%
Basic Materials0.0%0.0%

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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy 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.

IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

XLK is 87.54% more exposed to the Technology sector than IAU (87.54% vs 0.0%). XLK’s exposure to Financial Services and Industrials stocks is 10.71% higher and 1.75% higher respectively (10.71% vs. 0.0% and 1.75% vs. 0.0%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 0.00% less of the fund’s holdings compared to IAU (0.00% vs. 0.00%).

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%.

IAU - Holdings

IAU HoldingsWeight
Gold100.0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

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Risk Analysis

XLKIAU
Mean Return1.70.23
R-squared73.5616.03
Std. Deviation15.5816.97
Alpha10.434.16
Beta0.950.48
Sharpe Ratio1.270.13
Treynor Ratio21.441.5

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

The iShares Gold Trust (IAU) has a Treynor Ratio of 1.5 with a Standard Deviation of 16.97 and a Mean Return of 0.23. Its R-squared is 16.03 while IAU’s Sharpe Ratio is 0.13. Furthermore, the fund has a Alpha of 4.16 and a Beta of 0.48.

XLK’s Mean Return is 1.47 points higher than that of IAU and its R-squared is 57.53 points higher. With a Standard Deviation of 15.58, XLK is slightly less volatile than IAU. The Alpha and Beta of XLK are 6.27 points higher and 0.47 points higher than IAU’s Alpha and Beta.

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Performance

Annual Returns

XLK vs. IAU - Annual Returns

YearXLKIAU
202043.67%23.86%
201949.97%18.54%
2018-1.56%-1.39%
201734.27%11.58%
201614.81%8.85%
20155.62%-11.65%
201417.75%-0.44%
201325.98%-27.96%
201215.47%8.37%
20112.69%8.66%
201011.6%27.93%

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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.

Portfolio Growth

XLK vs. IAU - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLK$10,000$67,79020.02%
IAU$10,000$16,7866.03%

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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.

XLK’s CAGR is 13.99 percentage points higher than that of IAU and as a result, would have yielded $51,004 more on a $10,000 investment. Thus, XLK outperformed IAU by 13.99% annually.


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