XLV vs. IWS: What’s The Difference?

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

The expense ratio of XLV is 0.11 percentage points lower than IWS’s (0.12% vs. 0.23%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than IWS over the past ten years.

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

Summary

XLV IWS
Name Health Care Select Sector SPDR Fund iShares Russell Mid-Cap Value ETF
Category Health Mid-Cap Value
Issuer SPDR State Street Global Advisors iShares
AUM 27.88B 14.24B
Avg. Return 15.02% 12.35%
Div. Yield 1.4% 1.34%
Expense Ratio 0.12% 0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

XLV’s dividend yield is 0.06% higher than that of IWS (1.4% vs. 1.34%). Also, XLV yielded on average 2.68% more per year over the past decade (15.02% vs. 12.35%). The expense ratio of XLV is 0.11 percentage points lower than IWS’s (0.12% vs. 0.23%).

Fund Composition

Industry Exposure

XLV vs. IWS - Industry Exposure

XLV IWS
Technology 0.0% 11.39%
Industrials 0.0% 14.6%
Energy 0.0% 4.71%
Communication Services 0.0% 4.08%
Utilities 0.0% 6.97%
Healthcare 100.0% 8.56%
Consumer Defensive 0.0% 4.76%
Real Estate 0.0% 11.71%
Financial Services 0.0% 15.75%
Consumer Cyclical 0.0% 12.07%
Basic Materials 0.0% 5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

XLV is 91.44% more exposed to the Healthcare sector than IWS (100.0% vs 8.56%). XLV’s exposure to Technology and Industrials stocks is 11.39% lower and 14.60% lower respectively (0.0% vs. 11.39% and 0.0% vs. 14.6%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 39.53% less of the fund’s holdings compared to IWS (0.00% vs. 39.53%).

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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

XLV IWS
Mean Return 1.27 1.06
R-squared 58.19 87.04
Std. Deviation 12.94 16.03
Alpha 7.75 -4.11
Beta 0.7 1.1
Sharpe Ratio 1.13 0.75
Treynor Ratio 21.1 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Sharpe Ratio of 0.75 with a R-squared of 87.04 and a Mean Return of 1.06. Its Alpha is -4.11 while IWS’s Treynor Ratio is 10.3. Furthermore, the fund has a Standard Deviation of 16.03 and a Beta of 1.1.

XLV’s Mean Return is 0.21 points higher than that of IWS and its R-squared is 28.85 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than IWS. The Alpha and Beta of XLV are 11.86 points higher and 0.40 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

XLV vs. IWS - Annual Returns

Year XLV IWS
2020 13.33% 4.76%
2019 20.63% 26.78%
2018 6.3% -12.36%
2017 21.7% 13.1%
2016 -2.83% 19.69%
2015 6.82% -4.93%
2014 25.17% 14.49%
2013 41.24% 33.11%
2012 17.56% 18.27%
2011 12.44% -1.55%
2010 2.91% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

XLV vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
IWS $10,000 $33,083 12.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

XLV’s CAGR is 2.68 percentage points higher than that of IWS and as a result, would have yielded $11,064 more on a $10,000 investment. Thus, XLV outperformed IWS by 2.68% annually.


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