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XLK vs. MUB: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between XLK and MUB? And which fund is better?

The expense ratio of XLK is 0.05 percentage points higher than MUB’s (0.12% vs. 0.07%). XLK also has a high exposure to the technology sector while MUB is mostly comprised of AA bonds. Overall, XLK has provided higher returns than MUB over the past ten years.

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

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Summary

XLKMUB
NameTechnology Select Sector SPDR FundiShares National Muni Bond ETF
CategoryTechnologyMuni National Interm
IssuerSPDR State Street Global AdvisorsiShares
AUM42.3B22.71B
Avg. Return20.02%4.04%
Div. Yield0.73%1.96%
Expense Ratio0.12%0.07%

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 National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.

XLK’s dividend yield is 1.23% lower than that of MUB (0.73% vs. 1.96%). Also, XLK yielded on average 15.99% more per year over the past decade (20.02% vs. 4.04%). The expense ratio of XLK is 0.05 percentage points higher than MUB’s (0.12% vs. 0.07%).

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Fund Composition

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%.

MUB - Holdings

MUB Bond SectorsWeight
AA60.38%
AAA18.39%
A15.04%
BBB6.0%
Others0.17%
BB0.02%
Below B0.0%
B0.0%
US Government0.0%

MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.

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Risk Analysis

XLKMUB
Mean Return1.70.32
R-squared73.5699
Std. Deviation15.583.68
Alpha10.43-0.46
Beta0.951.01
Sharpe Ratio1.270.88
Treynor Ratio21.443.2

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

The iShares National Muni Bond ETF (MUB) has a Mean Return of 0.32 with a Treynor Ratio of 3.2 and a Beta of 1.01. Its Sharpe Ratio is 0.88 while MUB’s Standard Deviation is 3.68. Furthermore, the fund has a Alpha of -0.46 and a R-squared of 99.

XLK’s Mean Return is 1.38 points higher than that of MUB and its R-squared is 25.44 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than MUB. The Alpha and Beta of XLK are 10.89 points higher and 0.06 points lower than MUB’s Alpha and Beta.

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Performance

Annual Returns

XLK vs. MUB - Annual Returns

YearXLKMUB
202043.67%4.87%
201949.97%7.28%
2018-1.56%0.86%
201734.27%4.61%
201614.81%0.06%
20155.62%2.99%
201417.75%8.61%
201325.98%-3.26%
201215.47%6.14%
20112.69%10.85%
201011.6%1.4%

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 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% respectively.

Portfolio Growth

XLK vs. MUB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLK$10,000$67,79020.02%
MUB$10,000$15,3334.04%

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 MUB, the end total would have been $15,333. This equates to a $5,333 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.

XLK’s CAGR is 15.99 percentage points higher than that of MUB and as a result, would have yielded $52,457 more on a $10,000 investment. Thus, XLK outperformed MUB by 15.99% annually.


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