The Health Care Select Sector SPDR Fund (XLV) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between XLV and DIA? And which fund is better?
The expense ratio of XLV is 0.04 percentage points lower than DIA’s (0.12% vs. 0.16%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than DIA over the past ten years.
In this article, we’ll compare XLV vs. DIA. We’ll look at risk metrics and annual returns, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss XLV’s and DIA’s fund composition, performance, and holdings and examine how these affect their overall returns.
|Name||Health Care Select Sector SPDR Fund||SPDR Dow Jones Industrial Average ETF Trust|
|Issuer||SPDR State Street Global Advisors||SPDR State Street Global Advisors|
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 SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.
XLV’s dividend yield is 0.21% lower than that of DIA (1.4% vs. 1.61%). Also, XLV yielded on average 1.67% more per year over the past decade (15.02% vs. 13.35%). The expense ratio of XLV is 0.04 percentage points lower than DIA’s (0.12% vs. 0.16%).
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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 SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.
DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.
XLV is 82.08% more exposed to the Healthcare sector than DIA (100.0% vs 17.92%). XLV’s exposure to Technology and Industrials stocks is 17.32% lower and 16.70% lower respectively (0.0% vs. 17.32% and 0.0% vs. 16.7%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 34.12% less of the fund’s holdings compared to DIA (0.00% vs. 34.12%).
|Johnson & Johnson||9.19%|
|UnitedHealth Group Inc||8.01%|
|Thermo Fisher Scientific Inc||4.2%|
|Merck & Co Inc||4.17%|
|Eli Lilly and Co||3.87%|
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%.
|UnitedHealth Group Inc||7.63%|
|Goldman Sachs Group Inc||7.23%|
|The Home Depot Inc||6.07%|
|Visa Inc Class A||4.45%|
|Honeywell International Inc||4.18%|
DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.
Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.
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The Health Care Select Sector SPDR Fund (XLV) has a R-squared of 58.19 with a Sharpe Ratio of 1.13 and a Standard Deviation of 12.94. Its Treynor Ratio is 21.1 while XLV’s Alpha is 7.75. Furthermore, the fund has a Mean Return of 1.27 and a Beta of 0.7.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Beta of 0.97 with a R-squared of 93.31 and a Standard Deviation of 13.68. Its Sharpe Ratio is 0.94 while DIA’s Alpha is -0.94. Furthermore, the fund has a Mean Return of 1.13 and a Treynor Ratio of 13.07.
XLV’s Mean Return is 0.14 points higher than that of DIA and its R-squared is 35.12 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than DIA. The Alpha and Beta of XLV are 8.69 points higher and 0.27 points lower than DIA’s Alpha and Beta.
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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 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.
XLV’s CAGR is 1.67 percentage points higher than that of DIA and as a result, would have yielded $6,182 more on a $10,000 investment. Thus, XLV outperformed DIA by 1.67% annually.
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