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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.

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Summary

XLVIWP
NameHealth Care Select Sector SPDR FundiShares Russell Mid-Cap Growth ETF
CategoryHealthMid-Cap Growth
IssuerSPDR State Street Global AdvisorsiShares
AUM27.88B15.7B
Avg. Return15.02%16.75%
Div. Yield1.4%0.26%
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 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%).

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Fund Composition

Industry Exposure

XLV vs. IWP - Industry Exposure

XLVIWP
Technology0.0%33.88%
Industrials0.0%14.09%
Energy0.0%1.51%
Communication Services0.0%6.32%
Utilities0.0%0.16%
Healthcare100.0%16.79%
Consumer Defensive0.0%2.32%
Real Estate0.0%2.46%
Financial Services0.0%4.52%
Consumer Cyclical0.0%16.09%
Basic Materials0.0%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 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%.

IWP - Holdings

IWP HoldingsWeight
IDEXX Laboratories Inc1.3%
DocuSign Inc1.3%
Roku Inc Class A1.29%
Match Group Inc1.06%
Chipotle Mexican Grill Inc1.06%
Pinterest Inc1.05%
Veeva Systems Inc Class A1.04%
Palantir Technologies Inc Ordinary Shares – Class A1.04%
Lululemon Athletica Inc1.01%
DexCom Inc1.0%

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%.

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Risk Analysis

XLVIWP
Mean Return1.271.27
R-squared58.1987.01
Std. Deviation12.9416.05
Alpha7.75-1.03
Beta0.71.1
Sharpe Ratio1.130.91
Treynor Ratio21.112.98

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.

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Performance

Annual Returns

XLV vs. IWP - Annual Returns

YearXLVIWP
202013.33%35.29%
201920.63%35.14%
20186.3%-4.95%
201721.7%24.98%
2016-2.83%7.15%
20156.82%-0.39%
201425.17%11.68%
201341.24%35.44%
201217.56%15.62%
201112.44%-1.82%
20102.91%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

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
IWP$10,000$50,19116.75%

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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