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XLV vs. IWN: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and IWN is a iShares Small Value fund. So, what’s the difference between XLV and IWN? And which fund is better?

The expense ratio of XLV is 0.12 percentage points lower than IWN’s (0.12% vs. 0.24%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than IWN over the past ten years.

In this article, we’ll compare XLV vs. IWN. We’ll look at performance and portfolio growth, as well as at their holdings and annual returns. Moreover, I’ll also discuss XLV’s and IWN’s fund composition, industry exposure, and risk metrics and examine how these affect their overall returns.

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

XLVIWN
NameHealth Care Select Sector SPDR FundiShares Russell 2000 Value ETF
CategoryHealthSmall Value
IssuerSPDR State Street Global AdvisorsiShares
AUM27.88B15.48B
Avg. Return15.02%10.96%
Div. Yield1.4%1.26%
Expense Ratio0.12%0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

XLV’s dividend yield is 0.14% higher than that of IWN (1.4% vs. 1.26%). Also, XLV yielded on average 4.06% more per year over the past decade (15.02% vs. 10.96%). The expense ratio of XLV is 0.12 percentage points lower than IWN’s (0.12% vs. 0.24%).

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Fund Composition

Industry Exposure

XLV vs. IWN - Industry Exposure

XLVIWN
Technology0.0%6.02%
Industrials0.0%14.58%
Energy0.0%5.84%
Communication Services0.0%4.17%
Utilities0.0%4.69%
Healthcare100.0%10.94%
Consumer Defensive0.0%3.77%
Real Estate0.0%14.36%
Financial Services0.0%22.97%
Consumer Cyclical0.0%8.39%
Basic Materials0.0%4.29%

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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.

IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.

XLV is 89.06% more exposed to the Healthcare sector than IWN (100.0% vs 10.94%). XLV’s exposure to Technology and Industrials stocks is 6.02% lower and 14.58% lower respectively (0.0% vs. 6.02% and 0.0% vs. 14.58%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 45.72% less of the fund’s holdings compared to IWN (0.00% vs. 45.72%).

Holdings

XLV - Holdings

XLV HoldingsWeight
Johnson & Johnson9.19%
UnitedHealth Group Inc8.01%
Pfizer Inc4.64%
Abbott Laboratories4.36%
AbbVie Inc4.21%
Thermo Fisher Scientific Inc4.2%
Merck & Co Inc4.17%
Eli Lilly and Co3.87%
Danaher Corp3.61%
Medtronic PLC3.54%

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%.

IWN - Holdings

IWN HoldingsWeight
AMC Entertainment Holdings Inc Class A1.06%
Tenet Healthcare Corp0.47%
Stag Industrial Inc0.47%
Ovintiv Inc0.45%
EMCOR Group Inc0.42%
Valley National Bancorp0.37%
Chesapeake Energy Corp Ordinary Shares – New0.37%
Agree Realty Corp0.36%
Macy’s Inc0.35%
Essent Group Ltd0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

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Risk Analysis

XLVIWN
Mean Return1.271.01
R-squared58.1972.64
Std. Deviation12.9419.28
Alpha7.75-6.32
Beta0.71.21
Sharpe Ratio1.130.59
Treynor Ratio21.18.3

The Health Care Select Sector SPDR Fund (XLV) has a Treynor Ratio of 21.1 with a R-squared of 58.19 and a Sharpe Ratio of 1.13. Its Standard Deviation is 12.94 while XLV’s Alpha is 7.75. Furthermore, the fund has a Mean Return of 1.27 and a Beta of 0.7.

The iShares Russell 2000 Value ETF (IWN) has a R-squared of 72.64 with a Mean Return of 1.01 and a Alpha of -6.32. Its Beta is 1.21 while IWN’s Treynor Ratio is 8.3. Furthermore, the fund has a Sharpe Ratio of 0.59 and a Standard Deviation of 19.28.

XLV’s Mean Return is 0.26 points higher than that of IWN and its R-squared is 14.45 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than IWN. The Alpha and Beta of XLV are 14.07 points higher and 0.51 points lower than IWN’s Alpha and Beta.

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Performance

Annual Returns

XLV vs. IWN - Annual Returns

YearXLVIWN
202013.33%4.5%
201920.63%22.17%
20186.3%-12.94%
201721.7%7.73%
2016-2.83%31.64%
20156.82%-7.53%
201425.17%4.13%
201341.24%34.3%
201217.56%17.92%
201112.44%-5.64%
20102.91%24.29%

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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

XLV vs. IWN - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
IWN$10,000$28,18910.96%

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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.

XLV’s CAGR is 4.06 percentage points higher than that of IWN and as a result, would have yielded $15,958 more on a $10,000 investment. Thus, XLV outperformed IWN by 4.06% annually.


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