The Health Care Select Sector SPDR Fund (XLV) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between XLV and EFV? And which fund is better?
The expense ratio of XLV is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than EFV over the past ten years.
In this article, we’ll compare XLV vs. EFV. We’ll look at fund composition and annual returns, as well as at their performance and risk metrics. Moreover, I’ll also discuss XLV’s and EFV’s industry exposure, portfolio growth, and holdings and examine how these affect their overall returns.
Summary
| XLV | EFV | |
| Name | Health Care Select Sector SPDR Fund | iShares MSCI EAFE Value ETF |
| Category | Health | Foreign Large Value |
| Issuer | SPDR State Street Global Advisors | iShares |
| AUM | 27.88B | 14.37B |
| Avg. Return | 15.02% | 3.99% |
| Div. Yield | 1.4% | 2.94% |
| Expense Ratio | 0.12% | 0.39% |
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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
XLV’s dividend yield is 1.54% lower than that of EFV (1.4% vs. 2.94%). Also, XLV yielded on average 11.03% more per year over the past decade (15.02% vs. 3.99%). The expense ratio of XLV is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%).
Fund Composition
Industry Exposure
| XLV | EFV | |
| Technology | 0.0% | 2.98% |
| Industrials | 0.0% | 11.6% |
| Energy | 0.0% | 6.6% |
| Communication Services | 0.0% | 6.46% |
| Utilities | 0.0% | 6.14% |
| Healthcare | 100.0% | 9.19% |
| Consumer Defensive | 0.0% | 6.82% |
| Real Estate | 0.0% | 5.06% |
| Financial Services | 0.0% | 26.55% |
| Consumer Cyclical | 0.0% | 9.0% |
| Basic Materials | 0.0% | 9.59% |
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 EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.
EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.
XLV is 90.81% more exposed to the Healthcare sector than EFV (100.0% vs 9.19%). XLV’s exposure to Technology and Industrials stocks is 2.98% lower and 11.60% lower respectively (0.0% vs. 2.98% and 0.0% vs. 11.6%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 40.61% less of the fund’s holdings compared to EFV (0.00% vs. 40.61%).
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%.
| EFV Holdings | Weight |
| Novartis AG | 2.41% |
| Toyota Motor Corp | 2.21% |
| Commonwealth Bank of Australia | 1.59% |
| Siemens AG | 1.45% |
| Sanofi SA | 1.42% |
| HSBC Holdings PLC | 1.4% |
| TotalEnergies SE | 1.35% |
| Allianz SE | 1.23% |
| GlaxoSmithKline PLC | 1.18% |
| Rio Tinto PLC | 1.1% |
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
Risk Analysis
| XLV | EFV | |
| Mean Return | 1.27 | 0.42 |
| R-squared | 58.19 | 92.15 |
| Std. Deviation | 12.94 | 16.53 |
| Alpha | 7.75 | -1.77 |
| Beta | 0.7 | 1.05 |
| Sharpe Ratio | 1.13 | 0.26 |
| Treynor Ratio | 21.1 | 2.92 |
The Health Care Select Sector SPDR Fund (XLV) has a Treynor Ratio of 21.1 with a Beta of 0.7 and a R-squared of 58.19. Its Alpha is 7.75 while XLV’s Sharpe Ratio is 1.13. Furthermore, the fund has a Standard Deviation of 12.94 and a Mean Return of 1.27.
The iShares MSCI EAFE Value ETF (EFV) has a Treynor Ratio of 2.92 with a Sharpe Ratio of 0.26 and a Mean Return of 0.42. Its Alpha is -1.77 while EFV’s R-squared is 92.15. Furthermore, the fund has a Beta of 1.05 and a Standard Deviation of 16.53.
XLV’s Mean Return is 0.85 points higher than that of EFV and its R-squared is 33.96 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than EFV. The Alpha and Beta of XLV are 9.52 points higher and 0.35 points lower than EFV’s Alpha and Beta.
Performance
Annual Returns
| Year | XLV | EFV |
| 2020 | 13.33% | -2.78% |
| 2019 | 20.63% | 15.97% |
| 2018 | 6.3% | -14.88% |
| 2017 | 21.7% | 21.22% |
| 2016 | -2.83% | 4.87% |
| 2015 | 6.82% | -5.89% |
| 2014 | 25.17% | -5.65% |
| 2013 | 41.24% | 22.61% |
| 2012 | 17.56% | 17.52% |
| 2011 | 12.44% | -12.24% |
| 2010 | 2.91% | 3.18% |
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 EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLV | $10,000 | $44,147 | 15.02% |
| EFV | $10,000 | $14,134 | 3.99% |
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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
XLV’s CAGR is 11.03 percentage points higher than that of EFV and as a result, would have yielded $30,013 more on a $10,000 investment. Thus, XLV outperformed EFV by 11.03% annually.
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