XLK vs. IVW: What’s The Difference?

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

The expense ratio of XLK is 0.06 percentage points lower than IVW’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 IVW over the past ten years.

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

Summary

XLK IVW
Name Technology Select Sector SPDR Fund iShares S&P 500 Growth ETF
Category Technology Large Growth
Issuer SPDR State Street Global Advisors iShares
AUM 42.3B 35.72B
Avg. Return 20.02% 16.74%
Div. Yield 0.73% 0.61%
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 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

XLK’s dividend yield is 0.12% higher than that of IVW (0.73% vs. 0.61%). Also, XLK yielded on average 3.29% more per year over the past decade (20.02% vs. 16.74%). The expense ratio of XLK is 0.06 percentage points lower than IVW’s (0.12% vs. 0.18%).

Fund Composition

Industry Exposure

XLK vs. IVW - Industry Exposure

XLK IVW
Technology 87.54% 37.8%
Industrials 1.75% 5.72%
Energy 0.0% 0.06%
Communication Services 0.0% 15.44%
Utilities 0.0% 0.47%
Healthcare 0.0% 11.88%
Consumer Defensive 0.0% 3.84%
Real Estate 0.0% 1.11%
Financial Services 10.71% 6.78%
Consumer Cyclical 0.0% 15.25%
Basic Materials 0.0% 1.65%

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 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

XLK is 49.74% more exposed to the Technology sector than IVW (87.54% vs 37.8%). XLK’s exposure to Financial Services and Industrials stocks is 3.93% higher and 3.97% lower respectively (10.71% vs. 6.78% and 1.75% vs. 5.72%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.20% less of the fund’s holdings compared to IVW (0.00% vs. 20.20%).

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%.

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

Risk Analysis

XLK IVW
Mean Return 1.7 1.44
R-squared 73.56 93.82
Std. Deviation 15.58 13.77
Alpha 10.43 2.19
Beta 0.95 0.98
Sharpe Ratio 1.27 1.21
Treynor Ratio 21.44 17.24

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

The iShares S&P 500 Growth ETF (IVW) has a R-squared of 93.82 with a Treynor Ratio of 17.24 and a Alpha of 2.19. Its Standard Deviation is 13.77 while IVW’s Mean Return is 1.44. Furthermore, the fund has a Sharpe Ratio of 1.21 and a Beta of 0.98.

XLK’s Mean Return is 0.26 points higher than that of IVW and its R-squared is 20.26 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than IVW. The Alpha and Beta of XLK are 8.24 points higher and 0.03 points lower than IVW’s Alpha and Beta.

Performance

Annual Returns

XLK vs. IVW - Annual Returns

Year XLK IVW
2020 43.67% 33.21%
2019 49.97% 30.91%
2018 -1.56% -0.17%
2017 34.27% 27.2%
2016 14.81% 6.74%
2015 5.62% 5.33%
2014 17.75% 14.67%
2013 25.98% 32.48%
2012 15.47% 14.39%
2011 2.69% 4.49%
2010 11.6% 14.84%

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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.

Portfolio Growth

XLK vs. IVW - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLK $10,000 $67,790 20.02%
IVW $10,000 $51,915 16.74%

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 IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.

XLK’s CAGR is 3.29 percentage points higher than that of IVW and as a result, would have yielded $15,875 more on a $10,000 investment. Thus, XLK outperformed IVW by 3.29% annually.


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