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XLK vs. MTUM: What’s The Difference?

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

The expense ratio of XLK is 0.03 percentage points lower than MTUM’s (0.12% vs. 0.15%). XLK also has a higher exposure to the technology sector and a higher standard deviation. Overall, XLK has provided higher returns than MTUM over the past ten years.

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

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Summary

XLKMTUM
NameTechnology Select Sector SPDR FundiShares MSCI USA Momentum Factor ETF
CategoryTechnologyLarge Growth
IssuerSPDR State Street Global AdvisorsiShares
AUM42.3B14.53B
Avg. Return20.02%17.37%
Div. Yield0.73%0.44%
Expense Ratio0.12%0.15%

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 USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

XLK’s dividend yield is 0.29% higher than that of MTUM (0.73% vs. 0.44%). Also, XLK yielded on average 2.66% more per year over the past decade (20.02% vs. 17.37%). The expense ratio of XLK is 0.03 percentage points lower than MTUM’s (0.12% vs. 0.15%).

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Fund Composition

Industry Exposure

XLK vs. MTUM - Industry Exposure

XLKMTUM
Technology87.54%15.24%
Industrials1.75%12.47%
Energy0.0%1.77%
Communication Services0.0%13.18%
Utilities0.0%0.19%
Healthcare0.0%6.41%
Consumer Defensive0.0%2.88%
Real Estate0.0%0.43%
Financial Services10.71%34.32%
Consumer Cyclical0.0%9.96%
Basic Materials0.0%3.15%

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 USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

XLK is 72.30% more exposed to the Technology sector than MTUM (87.54% vs 15.24%). XLK’s exposure to Financial Services and Industrials stocks is 23.61% lower and 10.72% lower respectively (10.71% vs. 34.32% and 1.75% vs. 12.47%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 13.27% less of the fund’s holdings compared to MTUM (0.00% vs. 13.27%).

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%.

MTUM - Holdings

MTUM HoldingsWeight
Tesla Inc5.63%
The Walt Disney Co4.39%
JPMorgan Chase & Co4.35%
Berkshire Hathaway Inc Class B4.34%
Bank of America Corp3.81%
PayPal Holdings Inc3.76%
Wells Fargo & Co3.05%
Applied Materials Inc3.05%
Moderna Inc2.89%
Alphabet Inc Class C2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

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Risk Analysis

XLKMTUM
Mean Return1.70
R-squared73.560
Std. Deviation15.580
Alpha10.430
Beta0.950
Sharpe Ratio1.270
Treynor Ratio21.440

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

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Treynor Ratio of 0 with a Standard Deviation of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while MTUM’s R-squared is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.

XLK’s Mean Return is 1.70 points higher than that of MTUM and its R-squared is 73.56 points higher. With a Standard Deviation of 15.58, XLK is slightly more volatile than MTUM. The Alpha and Beta of XLK are 10.43 points higher and 0.95 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

XLK vs. MTUM - Annual Returns

YearXLKMTUM
202043.67%29.69%
201949.97%27.57%
2018-1.56%-1.77%
201734.27%37.6%
201614.81%4.89%
20155.62%9.12%
201417.75%14.48%
201325.98%0.0%
201215.47%0.0%
20112.69%0.0%
201011.6%0.0%

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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

XLK vs. MTUM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLK$10,000$40,66320.02%
MTUM$10,000$29,30117.37%

A $10,000 investment in XLK would have resulted in a final balance of $40,663. This is a profit of $30,663 over 7 years and amounts to a compound annual growth rate (CAGR) of 20.02%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

XLK’s CAGR is 2.66 percentage points higher than that of MTUM and as a result, would have yielded $11,362 more on a $10,000 investment. Thus, XLK outperformed MTUM by 2.66% annually.


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