The Health Care Select Sector SPDR Fund (XLV) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and IUSB is a iShares N/A fund. So, what’s the difference between XLV and IUSB? And which fund is better?
The expense ratio of XLV is 0.06 percentage points higher than IUSB’s (0.12% vs. 0.06%). XLV also has a high exposure to the healthcare sector while IUSB is mostly comprised of AAA bonds. Overall, XLV has provided higher returns than IUSB over the past ten years.
In this article, we’ll compare XLV vs. IUSB. We’ll look at risk metrics and industry exposure, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss XLV’s and IUSB’s fund composition, performance, and annual returns and examine how these affect their overall returns.
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Summary
| XLV | IUSB | |
| Name | Health Care Select Sector SPDR Fund | iShares Core Total USD Bond Market ETF |
| Category | Health | N/A |
| Issuer | SPDR State Street Global Advisors | iShares |
| AUM | 27.88B | 14.49B |
| Avg. Return | 15.02% | 4.13% |
| Div. Yield | 1.4% | 2.1% |
| Expense Ratio | 0.12% | 0.06% |
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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
XLV’s dividend yield is 0.70% lower than that of IUSB (1.4% vs. 2.1%). Also, XLV yielded on average 10.90% more per year over the past decade (15.02% vs. 4.13%). The expense ratio of XLV is 0.06 percentage points higher than IUSB’s (0.12% vs. 0.06%).
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Fund Composition
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%.
| IUSB Bond Sectors | Weight |
| AAA | 58.32% |
| BBB | 16.98% |
| A | 12.27% |
| BB | 4.33% |
| AA | 3.36% |
| B | 2.8% |
| Others | 1.01% |
| Below B | 0.92% |
| US Government | 0.0% |
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
Risk Analysis
| XLV | IUSB | |
| Mean Return | 1.27 | 0 |
| R-squared | 58.19 | 0 |
| Std. Deviation | 12.94 | 0 |
| Alpha | 7.75 | 0 |
| Beta | 0.7 | 0 |
| Sharpe Ratio | 1.13 | 0 |
| Treynor Ratio | 21.1 | 0 |
The Health Care Select Sector SPDR Fund (XLV) has a Treynor Ratio of 21.1 with a R-squared of 58.19 and a Standard Deviation of 12.94. Its Sharpe Ratio is 1.13 while XLV’s Mean Return is 1.27. Furthermore, the fund has a Beta of 0.7 and a Alpha of 7.75.
The iShares Core Total USD Bond Market ETF (IUSB) has a Mean Return of 0 with a R-squared of 0 and a Beta of 0. Its Alpha is 0 while IUSB’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.
XLV’s Mean Return is 1.27 points higher than that of IUSB and its R-squared is 58.19 points higher. With a Standard Deviation of 12.94, XLV is slightly more volatile than IUSB. The Alpha and Beta of XLV are 7.75 points higher and 0.70 points higher than IUSB’s Alpha and Beta.
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Performance
Annual Returns
| Year | XLV | IUSB |
| 2020 | 13.33% | 7.59% |
| 2019 | 20.63% | 9.26% |
| 2018 | 6.3% | -0.38% |
| 2017 | 21.7% | 4.06% |
| 2016 | -2.83% | 3.78% |
| 2015 | 6.82% | 0.46% |
| 2014 | 25.17% | 0.0% |
| 2013 | 41.24% | 0.0% |
| 2012 | 17.56% | 0.0% |
| 2011 | 12.44% | 0.0% |
| 2010 | 2.91% | 0.0% |
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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLV | $10,000 | $18,357 | 15.02% |
| IUSB | $10,000 | $12,704 | 4.13% |
A $10,000 investment in XLV would have resulted in a final balance of $18,357. This is a profit of $8,357 over 6 years and amounts to a compound annual growth rate (CAGR) of 15.02%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
XLV’s CAGR is 10.90 percentage points higher than that of IUSB and as a result, would have yielded $5,653 more on a $10,000 investment. Thus, XLV outperformed IUSB by 10.90% annually.
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