XLV vs. MTUM: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and MTUM is a iShares Large Growth fund. So, what’s the difference between XLV and MTUM? And which fund is better?

The expense ratio of XLV is 0.03 percentage points lower than MTUM’s (0.12% vs. 0.15%). XLV also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, XLV has provided lower returns than MTUM over the past ten years.

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

Summary

XLV MTUM
Name Health Care Select Sector SPDR Fund iShares MSCI USA Momentum Factor ETF
Category Health Large Growth
Issuer SPDR State Street Global Advisors iShares
AUM 27.88B 14.53B
Avg. Return 15.02% 17.37%
Div. Yield 1.4% 0.44%
Expense Ratio 0.12% 0.15%

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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

XLV’s dividend yield is 0.96% higher than that of MTUM (1.4% vs. 0.44%). Also, XLV yielded on average 2.34% less per year over the past decade (15.02% vs. 17.37%). The expense ratio of XLV is 0.03 percentage points lower than MTUM’s (0.12% vs. 0.15%).

Fund Composition

Industry Exposure

XLV vs. MTUM - Industry Exposure

XLV MTUM
Technology 0.0% 15.24%
Industrials 0.0% 12.47%
Energy 0.0% 1.77%
Communication Services 0.0% 13.18%
Utilities 0.0% 0.19%
Healthcare 100.0% 6.41%
Consumer Defensive 0.0% 2.88%
Real Estate 0.0% 0.43%
Financial Services 0.0% 34.32%
Consumer Cyclical 0.0% 9.96%
Basic Materials 0.0% 3.15%

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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

XLV is 93.59% more exposed to the Healthcare sector than MTUM (100.0% vs 6.41%). XLV’s exposure to Technology and Industrials stocks is 15.24% lower and 12.47% lower respectively (0.0% vs. 15.24% and 0.0% vs. 12.47%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 44.71% less of the fund’s holdings compared to MTUM (0.00% vs. 44.71%).

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%.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

Risk Analysis

XLV MTUM
Mean Return 1.27 0
R-squared 58.19 0
Std. Deviation 12.94 0
Alpha 7.75 0
Beta 0.7 0
Sharpe Ratio 1.13 0
Treynor Ratio 21.1 0

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

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Alpha of 0 with a R-squared of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while MTUM’s Beta is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.

XLV’s Mean Return is 1.27 points higher than that of MTUM and its R-squared is 58.19 points higher. With a Standard Deviation of 12.94, XLV is slightly more volatile than MTUM. The Alpha and Beta of XLV are 7.75 points higher and 0.70 points higher than MTUM’s Alpha and Beta.

Performance

Annual Returns

XLV vs. MTUM - Annual Returns

Year XLV MTUM
2020 13.33% 29.69%
2019 20.63% 27.57%
2018 6.3% -1.77%
2017 21.7% 37.6%
2016 -2.83% 4.89%
2015 6.82% 9.12%
2014 25.17% 14.48%
2013 41.24% 0.0%
2012 17.56% 0.0%
2011 12.44% 0.0%
2010 2.91% 0.0%

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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

XLV vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $22,977 15.02%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in XLV would have resulted in a final balance of $22,977. This is a profit of $12,977 over 7 years and amounts to a compound annual growth rate (CAGR) of 15.02%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

XLV’s CAGR is 2.34 percentage points lower than that of MTUM and as a result, would have yielded $6,324 less on a $10,000 investment. Thus, XLV performed worse than MTUM by 2.34% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply