XLK vs. IVE: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and IVE is a iShares Large Value fund. So, what’s the difference between XLK and IVE? And which fund is better?

The expense ratio of XLK is 0.06 percentage points lower than IVE’s (0.12% vs. 0.18%). XLK also has a higher exposure to the technology sector and a higher standard deviation. Overall, XLK has provided higher returns than IVE over the past ten years.

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

Summary

XLK IVE
Name Technology Select Sector SPDR Fund iShares S&P 500 Value ETF
Category Technology Large Value
Issuer SPDR State Street Global Advisors iShares
AUM 42.3B 22.4B
Avg. Return 20.02% 11.68%
Div. Yield 0.73% 1.88%
Expense Ratio 0.12% 0.18%

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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

XLK’s dividend yield is 1.15% lower than that of IVE (0.73% vs. 1.88%). Also, XLK yielded on average 8.34% more per year over the past decade (20.02% vs. 11.68%). The expense ratio of XLK is 0.06 percentage points lower than IVE’s (0.12% vs. 0.18%).

Fund Composition

Industry Exposure

XLK vs. IVE - Industry Exposure

XLK IVE
Technology 87.54% 9.41%
Industrials 1.75% 12.19%
Energy 0.0% 5.43%
Communication Services 0.0% 6.4%
Utilities 0.0% 4.82%
Healthcare 0.0% 15.4%
Consumer Defensive 0.0% 9.23%
Real Estate 0.0% 4.38%
Financial Services 10.71% 22.06%
Consumer Cyclical 0.0% 7.68%
Basic Materials 0.0% 2.99%

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 S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.

IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.

XLK is 78.13% more exposed to the Technology sector than IVE (87.54% vs 9.41%). XLK’s exposure to Financial Services and Industrials stocks is 11.35% lower and 10.44% lower respectively (10.71% vs. 22.06% and 1.75% vs. 12.19%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.29% less of the fund’s holdings compared to IVE (0.00% vs. 21.29%).

Holdings

XLK - 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%.

IVE - Holdings

IVE Holdings Weight
Berkshire Hathaway Inc Class B 3.05%
JPMorgan Chase & Co 2.65%
The Walt Disney Co 1.85%
Bank of America Corp 1.67%
Johnson & Johnson 1.57%
Exxon Mobil Corp 1.41%
Pfizer Inc 1.38%
Cisco Systems Inc 1.35%
Verizon Communications Inc 1.33%
Intel Corp 1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

Risk Analysis

XLK IVE
Mean Return 1.7 1.05
R-squared 73.56 92.08
Std. Deviation 15.58 14.3
Alpha 10.43 -2.9
Beta 0.95 1.01
Sharpe Ratio 1.27 0.83
Treynor Ratio 21.44 11.41

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

The iShares S&P 500 Value ETF (IVE) has a Beta of 1.01 with a Standard Deviation of 14.3 and a R-squared of 92.08. Its Mean Return is 1.05 while IVE’s Sharpe Ratio is 0.83. Furthermore, the fund has a Treynor Ratio of 11.41 and a Alpha of -2.9.

XLK’s Mean Return is 0.65 points higher than that of IVE and its R-squared is 18.52 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than IVE. The Alpha and Beta of XLK are 13.33 points higher and 0.06 points lower than IVE’s Alpha and Beta.

Performance

Annual Returns

XLK vs. IVE - Annual Returns

Year XLK IVE
2020 43.67% 1.24%
2019 49.97% 31.71%
2018 -1.56% -9.09%
2017 34.27% 15.19%
2016 14.81% 17.17%
2015 5.62% -3.24%
2014 17.75% 12.14%
2013 25.98% 31.69%
2012 15.47% 17.45%
2011 2.69% -0.63%
2010 11.6% 14.9%

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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.

Portfolio Growth

XLK vs. IVE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLK $10,000 $67,790 20.02%
IVE $10,000 $31,350 11.68%

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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.

XLK’s CAGR is 8.34 percentage points higher than that of IVE and as a result, would have yielded $36,440 more on a $10,000 investment. Thus, XLK outperformed IVE by 8.34% annually.


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