XLV vs. ACWI: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and ACWI is a iShares N/A fund. So, what’s the difference between XLV and ACWI? And which fund is better?

The expense ratio of XLV is 0.20 percentage points lower than ACWI’s (0.12% vs. 0.32%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than ACWI over the past ten years.

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

Summary

XLV ACWI
Name Health Care Select Sector SPDR Fund iShares MSCI ACWI ETF
Category Health N/A
Issuer SPDR State Street Global Advisors iShares
AUM 27.88B 16.85B
Avg. Return 15.02% 10.21%
Div. Yield 1.4% 1.39%
Expense Ratio 0.12% 0.32%

The Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

XLV’s dividend yield is 0.01% higher than that of ACWI (1.4% vs. 1.39%). Also, XLV yielded on average 4.81% more per year over the past decade (15.02% vs. 10.21%). The expense ratio of XLV is 0.20 percentage points lower than ACWI’s (0.12% vs. 0.32%).

Fund Composition

Industry Exposure

XLV vs. ACWI - Industry Exposure

XLV ACWI
Technology 0.0% 20.41%
Industrials 0.0% 9.65%
Energy 0.0% 3.48%
Communication Services 0.0% 9.87%
Utilities 0.0% 2.61%
Healthcare 100.0% 11.74%
Consumer Defensive 0.0% 7.15%
Real Estate 0.0% 2.75%
Financial Services 0.0% 15.58%
Consumer Cyclical 0.0% 12.01%
Basic Materials 0.0% 4.73%

The Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

XLV is 88.26% more exposed to the Healthcare sector than ACWI (100.0% vs 11.74%). XLV’s exposure to Technology and Industrials stocks is 20.41% lower and 9.65% lower respectively (0.0% vs. 20.41% and 0.0% vs. 9.65%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 30.34% less of the fund’s holdings compared to ACWI (0.00% vs. 30.34%).

Holdings

XLV - Holdings

XLV Holdings Weight
Johnson & Johnson 9.19%
UnitedHealth Group Inc 8.01%
Pfizer Inc 4.64%
Abbott Laboratories 4.36%
AbbVie Inc 4.21%
Thermo Fisher Scientific Inc 4.2%
Merck & Co Inc 4.17%
Eli Lilly and Co 3.87%
Danaher Corp 3.61%
Medtronic PLC 3.54%

XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.

Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

Risk Analysis

XLV ACWI
Mean Return 1.27 0.89
R-squared 58.19 99.96
Std. Deviation 12.94 14.05
Alpha 7.75 0.15
Beta 0.7 1
Sharpe Ratio 1.13 0.71
Treynor Ratio 21.1 9.45

The Health Care Select Sector SPDR Fund (XLV) has a Treynor Ratio of 21.1 with a Sharpe Ratio of 1.13 and a Mean Return of 1.27. Its Standard Deviation is 12.94 while XLV’s R-squared is 58.19. Furthermore, the fund has a Beta of 0.7 and a Alpha of 7.75.

The iShares MSCI ACWI ETF (ACWI) has a R-squared of 99.96 with a Sharpe Ratio of 0.71 and a Alpha of 0.15. Its Mean Return is 0.89 while ACWI’s Standard Deviation is 14.05. Furthermore, the fund has a Treynor Ratio of 9.45 and a Beta of 1.

XLV’s Mean Return is 0.38 points higher than that of ACWI and its R-squared is 41.77 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than ACWI. The Alpha and Beta of XLV are 7.60 points higher and 0.30 points lower than ACWI’s Alpha and Beta.

Performance

Annual Returns

XLV vs. ACWI - Annual Returns

Year XLV ACWI
2020 13.33% 16.38%
2019 20.63% 26.7%
2018 6.3% -9.15%
2017 21.7% 24.35%
2016 -2.83% 8.22%
2015 6.82% -2.39%
2014 25.17% 4.64%
2013 41.24% 22.91%
2012 17.56% 15.99%
2011 12.44% -7.6%
2010 2.91% 12.31%

XLV had its best year in 2013 with an annual return of 41.24%. XLV’s worst year over the past decade yielded -2.83% and occurred in 2016. In most years the Health Care Select Sector SPDR Fund provided moderate returns such as in 2011, 2020, and 2012 where annual returns amounted to 12.44%, 13.33%, and 17.56% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

XLV vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in XLV would have resulted in a final balance of $44,147. This is a profit of $34,147 over 11 years and amounts to a compound annual growth rate (CAGR) of 15.02%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

XLV’s CAGR is 4.81 percentage points higher than that of ACWI and as a result, would have yielded $16,906 more on a $10,000 investment. Thus, XLV outperformed ACWI by 4.81% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply