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XLK vs. IWP: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between XLK and IWP? And which fund is better?

The expense ratio of XLK is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%). XLK also has a higher exposure to the technology sector and a lower standard deviation. Overall, XLK has provided higher returns than IWP over the past ten years.

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

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Summary

XLKIWP
NameTechnology Select Sector SPDR FundiShares Russell Mid-Cap Growth ETF
CategoryTechnologyMid-Cap Growth
IssuerSPDR State Street Global AdvisorsiShares
AUM42.3B15.7B
Avg. Return20.02%16.75%
Div. Yield0.73%0.26%
Expense Ratio0.12%0.24%

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 Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

XLK’s dividend yield is 0.47% higher than that of IWP (0.73% vs. 0.26%). Also, XLK yielded on average 3.28% more per year over the past decade (20.02% vs. 16.75%). The expense ratio of XLK is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%).

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Fund Composition

Industry Exposure

XLK vs. IWP - Industry Exposure

XLKIWP
Technology87.54%33.88%
Industrials1.75%14.09%
Energy0.0%1.51%
Communication Services0.0%6.32%
Utilities0.0%0.16%
Healthcare0.0%16.79%
Consumer Defensive0.0%2.32%
Real Estate0.0%2.46%
Financial Services10.71%4.52%
Consumer Cyclical0.0%16.09%
Basic Materials0.0%1.86%

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 Russell Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

XLK is 53.66% more exposed to the Technology sector than IWP (87.54% vs 33.88%). XLK’s exposure to Financial Services and Industrials stocks is 6.19% higher and 12.34% lower respectively (10.71% vs. 4.52% and 1.75% vs. 14.09%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.87% less of the fund’s holdings compared to IWP (0.00% vs. 20.87%).

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%.

IWP - Holdings

IWP HoldingsWeight
IDEXX Laboratories Inc1.3%
DocuSign Inc1.3%
Roku Inc Class A1.29%
Match Group Inc1.06%
Chipotle Mexican Grill Inc1.06%
Pinterest Inc1.05%
Veeva Systems Inc Class A1.04%
Palantir Technologies Inc Ordinary Shares – Class A1.04%
Lululemon Athletica Inc1.01%
DexCom Inc1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

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Risk Analysis

XLKIWP
Mean Return1.71.27
R-squared73.5687.01
Std. Deviation15.5816.05
Alpha10.43-1.03
Beta0.951.1
Sharpe Ratio1.270.91
Treynor Ratio21.4412.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Alpha of -1.03 with a Treynor Ratio of 12.98 and a Standard Deviation of 16.05. Its Sharpe Ratio is 0.91 while IWP’s Mean Return is 1.27. Furthermore, the fund has a Beta of 1.1 and a R-squared of 87.01.

XLK’s Mean Return is 0.43 points higher than that of IWP and its R-squared is 13.45 points lower. With a Standard Deviation of 15.58, XLK is slightly less volatile than IWP. The Alpha and Beta of XLK are 11.46 points higher and 0.15 points lower than IWP’s Alpha and Beta.

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Performance

Annual Returns

XLK vs. IWP - Annual Returns

YearXLKIWP
202043.67%35.29%
201949.97%35.14%
2018-1.56%-4.95%
201734.27%24.98%
201614.81%7.15%
20155.62%-0.39%
201417.75%11.68%
201325.98%35.44%
201215.47%15.62%
20112.69%-1.82%
201011.6%26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

XLK vs. IWP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLK$10,000$67,79020.02%
IWP$10,000$50,19116.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

XLK’s CAGR is 3.28 percentage points higher than that of IWP and as a result, would have yielded $17,599 more on a $10,000 investment. Thus, XLK outperformed IWP by 3.28% annually.


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