XLV vs. USMV: What’s The Difference?

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

The expense ratio of XLV is 0.03 percentage points lower than USMV’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 higher returns than USMV over the past ten years.

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

Summary

XLV USMV
Name Health Care Select Sector SPDR Fund iShares MSCI USA Min Vol Factor ETF
Category Health Large Blend
Issuer SPDR State Street Global Advisors iShares
AUM 27.88B 27.6B
Avg. Return 15.02% 13.89%
Div. Yield 1.4% 1.5%
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 Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

XLV’s dividend yield is 0.10% lower than that of USMV (1.4% vs. 1.5%). Also, XLV yielded on average 1.13% more per year over the past decade (15.02% vs. 13.89%). The expense ratio of XLV is 0.03 percentage points lower than USMV’s (0.12% vs. 0.15%).

Fund Composition

Industry Exposure

XLV vs. USMV - Industry Exposure

XLV USMV
Technology 0.0% 20.53%
Industrials 0.0% 10.51%
Energy 0.0% 0.21%
Communication Services 0.0% 11.03%
Utilities 0.0% 6.93%
Healthcare 100.0% 18.42%
Consumer Defensive 0.0% 12.82%
Real Estate 0.0% 2.73%
Financial Services 0.0% 9.65%
Consumer Cyclical 0.0% 5.53%
Basic Materials 0.0% 1.65%

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 Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

XLV is 81.58% more exposed to the Healthcare sector than USMV (100.0% vs 18.42%). XLV’s exposure to Technology and Industrials stocks is 20.53% lower and 10.51% lower respectively (0.0% vs. 20.53% and 0.0% vs. 10.51%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 17.91% less of the fund’s holdings compared to USMV (0.00% vs. 17.91%).

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%.

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe Inc 1.45%
The Kroger Co 1.44%
Johnson & Johnson 1.42%
Gilead Sciences Inc 1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

Risk Analysis

XLV USMV
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 Alpha of 7.75 and a Treynor Ratio of 21.1. Its R-squared is 58.19 while XLV’s Standard Deviation is 12.94. Furthermore, the fund has a Mean Return of 1.27 and a Beta of 0.7.

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

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

Performance

Annual Returns

XLV vs. USMV - Annual Returns

Year XLV USMV
2020 13.33% 5.6%
2019 20.63% 27.77%
2018 6.3% 1.36%
2017 21.7% 18.97%
2016 -2.83% 10.5%
2015 6.82% 5.5%
2014 25.17% 16.34%
2013 41.24% 25.11%
2012 17.56% 11.04%
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 2019 was the strongest year for USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.

Portfolio Growth

XLV vs. USMV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $32,453 15.02%
USMV $10,000 $27,607 13.89%

A $10,000 investment in XLV would have resulted in a final balance of $32,453. This is a profit of $22,453 over 8 years and amounts to a compound annual growth rate (CAGR) of 15.02%.

With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.

XLV’s CAGR is 1.13 percentage points higher than that of USMV and as a result, would have yielded $4,846 more on a $10,000 investment. Thus, XLV outperformed USMV by 1.13% annually.


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