The Health Care Select Sector SPDR Fund (XLV) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and IAU is a iShares N/A fund. So, what’s the difference between XLV and IAU? And which fund is better?
The expense ratio of XLV is 0.13 percentage points lower than IAU’s (0.12% vs. 0.25%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than IAU over the past ten years.
In this article, we’ll compare XLV vs. IAU. We’ll look at performance and industry exposure, as well as at their fund composition and annual returns. Moreover, I’ll also discuss XLV’s and IAU’s risk metrics, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||Health Care Select Sector SPDR Fund||iShares Gold Trust|
|Issuer||SPDR State Street Global Advisors||iShares|
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
XLV’s dividend yield is 1.40% higher than that of IAU (1.4% vs. 0.0%). Also, XLV yielded on average 8.99% more per year over the past decade (15.02% vs. 6.03%). The expense ratio of XLV is 0.13 percentage points lower than IAU’s (0.12% vs. 0.25%).
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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy 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.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
XLV is 100.00% more exposed to the Healthcare sector than IAU (100.0% vs 0.0%). XLV’s exposure to Technology and Industrials stocks is 0.00% lower and 0.00% lower respectively (0.0% vs. 0.0% and 0.0% vs. 0.0%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 0.00% less of the fund’s holdings compared to IAU (0.00% vs. 0.00%).
|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%.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
The Health Care Select Sector SPDR Fund (XLV) has a R-squared of 58.19 with a Alpha of 7.75 and a Mean Return of 1.27. Its Treynor Ratio is 21.1 while XLV’s Sharpe Ratio is 1.13. Furthermore, the fund has a Beta of 0.7 and a Standard Deviation of 12.94.
The iShares Gold Trust (IAU) has a Mean Return of 0.23 with a Treynor Ratio of 1.5 and a Sharpe Ratio of 0.13. Its Alpha is 4.16 while IAU’s Beta is 0.48. Furthermore, the fund has a R-squared of 16.03 and a Standard Deviation of 16.97.
XLV’s Mean Return is 1.04 points higher than that of IAU and its R-squared is 42.16 points higher. With a Standard Deviation of 12.94, XLV is slightly less volatile than IAU. The Alpha and Beta of XLV are 3.59 points higher and 0.22 points higher than IAU’s Alpha and Beta.
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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% 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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
XLV’s CAGR is 8.99 percentage points higher than that of IAU and as a result, would have yielded $27,361 more on a $10,000 investment. Thus, XLV outperformed IAU by 8.99% annually.
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