The Health Care Select Sector SPDR Fund (XLV) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and IVE is a iShares Large Value fund. So, what’s the difference between XLV and IVE? And which fund is better?
The expense ratio of XLV is 0.06 percentage points lower than IVE’s (0.12% vs. 0.18%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than IVE over the past ten years.
In this article, we’ll compare XLV vs. IVE. We’ll look at performance and industry exposure, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss XLV’s and IVE’s annual returns, holdings, and fund composition and examine how these affect their overall returns.
|Name||Health Care Select Sector SPDR Fund||iShares S&P 500 Value ETF|
|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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
XLV’s dividend yield is 0.48% lower than that of IVE (1.4% vs. 1.88%). Also, XLV yielded on average 3.34% more per year over the past decade (15.02% vs. 11.68%). The expense ratio of XLV is 0.06 percentage points lower than IVE’s (0.12% vs. 0.18%).
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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 iShares S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.
IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.
XLV is 84.60% more exposed to the Healthcare sector than IVE (100.0% vs 15.4%). XLV’s exposure to Technology and Industrials stocks is 9.41% lower and 12.19% lower respectively (0.0% vs. 9.41% and 0.0% vs. 12.19%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 34.12% less of the fund’s holdings compared to IVE (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%.
|Berkshire Hathaway Inc Class B||3.05%|
|JPMorgan Chase & Co||2.65%|
|The Walt Disney Co||1.85%|
|Bank of America Corp||1.67%|
|Johnson & Johnson||1.57%|
|Exxon Mobil Corp||1.41%|
|Cisco Systems Inc||1.35%|
|Verizon Communications Inc||1.33%|
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
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The Health Care Select Sector SPDR Fund (XLV) has a Beta of 0.7 with a Standard Deviation of 12.94 and a Mean Return of 1.27. Its Sharpe Ratio is 1.13 while XLV’s Treynor Ratio is 21.1. Furthermore, the fund has a Alpha of 7.75 and a R-squared of 58.19.
The iShares S&P 500 Value ETF (IVE) has a Alpha of -2.9 with a Beta of 1.01 and a Treynor Ratio of 11.41. Its Mean Return is 1.05 while IVE’s R-squared is 92.08. Furthermore, the fund has a Standard Deviation of 14.3 and a Sharpe Ratio of 0.83.
XLV’s Mean Return is 0.22 points higher than that of IVE and its R-squared is 33.89 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than IVE. The Alpha and Beta of XLV are 10.65 points higher and 0.31 points lower than IVE’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 2019 was the strongest year for IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% 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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.
XLV’s CAGR is 3.34 percentage points higher than that of IVE and as a result, would have yielded $12,797 more on a $10,000 investment. Thus, XLV outperformed IVE by 3.34% annually.
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