XLV vs. IWP: What’s The Difference?

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

The expense ratio of XLV is 0.12 percentage points lower than IWP’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 lower returns than IWP over the past ten years.

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

Summary

XLV IWP
Name Health Care Select Sector SPDR Fund iShares Russell Mid-Cap Growth ETF
Category Health Mid-Cap Growth
Issuer SPDR State Street Global Advisors iShares
AUM 27.88B 15.7B
Avg. Return 15.02% 16.75%
Div. Yield 1.4% 0.26%
Expense Ratio 0.12% 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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

XLV’s dividend yield is 1.14% higher than that of IWP (1.4% vs. 0.26%). Also, XLV yielded on average 1.72% less per year over the past decade (15.02% vs. 16.75%). The expense ratio of XLV is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%).

Fund Composition

Industry Exposure

XLV vs. IWP - Industry Exposure

XLV IWP
Technology 0.0% 33.88%
Industrials 0.0% 14.09%
Energy 0.0% 1.51%
Communication Services 0.0% 6.32%
Utilities 0.0% 0.16%
Healthcare 100.0% 16.79%
Consumer Defensive 0.0% 2.32%
Real Estate 0.0% 2.46%
Financial Services 0.0% 4.52%
Consumer Cyclical 0.0% 16.09%
Basic Materials 0.0% 1.86%

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 Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

XLV is 83.21% more exposed to the Healthcare sector than IWP (100.0% vs 16.79%). XLV’s exposure to Technology and Industrials stocks is 33.88% lower and 14.09% lower respectively (0.0% vs. 33.88% and 0.0% vs. 14.09%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 23.07% less of the fund’s holdings compared to IWP (0.00% vs. 23.07%).

Holdings

XLV - 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%.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

Risk Analysis

XLV IWP
Mean Return 1.27 1.27
R-squared 58.19 87.01
Std. Deviation 12.94 16.05
Alpha 7.75 -1.03
Beta 0.7 1.1
Sharpe Ratio 1.13 0.91
Treynor Ratio 21.1 12.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Treynor Ratio of 12.98 with a Standard Deviation of 16.05 and a Mean Return of 1.27. Its R-squared is 87.01 while IWP’s Beta is 1.1. Furthermore, the fund has a Alpha of -1.03 and a Sharpe Ratio of 0.91.

XLV’s Mean Return is 0.00 points lower than that of IWP and its R-squared is 28.82 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than IWP. The Alpha and Beta of XLV are 8.78 points higher and 0.40 points lower than IWP’s Alpha and Beta.

Performance

Annual Returns

XLV vs. IWP - Annual Returns

Year XLV IWP
2020 13.33% 35.29%
2019 20.63% 35.14%
2018 6.3% -4.95%
2017 21.7% 24.98%
2016 -2.83% 7.15%
2015 6.82% -0.39%
2014 25.17% 11.68%
2013 41.24% 35.44%
2012 17.56% 15.62%
2011 12.44% -1.82%
2010 2.91% 26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

XLV vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
IWP $10,000 $50,191 16.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

XLV’s CAGR is 1.72 percentage points lower than that of IWP and as a result, would have yielded $6,044 less on a $10,000 investment. Thus, XLV performed worse than IWP by 1.72% annually.


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