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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.

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Summary

XLVACWI
NameHealth Care Select Sector SPDR FundiShares MSCI ACWI ETF
CategoryHealthN/A
IssuerSPDR State Street Global AdvisorsiShares
AUM27.88B16.85B
Avg. Return15.02%10.21%
Div. Yield1.4%1.39%
Expense Ratio0.12%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%).

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Fund Composition

Industry Exposure

XLV vs. ACWI - Industry Exposure

XLVACWI
Technology0.0%20.41%
Industrials0.0%9.65%
Energy0.0%3.48%
Communication Services0.0%9.87%
Utilities0.0%2.61%
Healthcare100.0%11.74%
Consumer Defensive0.0%7.15%
Real Estate0.0%2.75%
Financial Services0.0%15.58%
Consumer Cyclical0.0%12.01%
Basic Materials0.0%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 HoldingsWeight
Johnson & Johnson9.19%
UnitedHealth Group Inc8.01%
Pfizer Inc4.64%
Abbott Laboratories4.36%
AbbVie Inc4.21%
Thermo Fisher Scientific Inc4.2%
Merck & Co Inc4.17%
Eli Lilly and Co3.87%
Danaher Corp3.61%
Medtronic PLC3.54%

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 HoldingsWeight
Apple Inc3.44%
Microsoft Corp2.91%
Amazon.com Inc2.21%
Facebook Inc A1.25%
Alphabet Inc Class C1.12%
Alphabet Inc A1.09%
Taiwan Semiconductor Manufacturing Co Ltd0.79%
Tesla Inc0.78%
NVIDIA Corp0.74%
JPMorgan Chase & Co0.71%

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%.

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Risk Analysis

XLVACWI
Mean Return1.270.89
R-squared58.1999.96
Std. Deviation12.9414.05
Alpha7.750.15
Beta0.71
Sharpe Ratio1.130.71
Treynor Ratio21.19.45

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.

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Performance

Annual Returns

XLV vs. ACWI - Annual Returns

YearXLVACWI
202013.33%16.38%
201920.63%26.7%
20186.3%-9.15%
201721.7%24.35%
2016-2.83%8.22%
20156.82%-2.39%
201425.17%4.64%
201341.24%22.91%
201217.56%15.99%
201112.44%-7.6%
20102.91%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

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
ACWI$10,000$27,24110.21%

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.


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