XLV vs. XLI: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between XLV and XLI? And which fund is better?

XLV and XLI have the same expense ratio: 0.12%. XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than XLI over the past ten years.

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

Summary

XLV XLI
Name Health Care Select Sector SPDR Fund Industrial Select Sector SPDR Fund
Category Health Industrials
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 27.88B 19.33B
Avg. Return 15.02% 14.44%
Div. Yield 1.4% 1.25%
Expense Ratio 0.12% 0.12%

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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.

XLV’s dividend yield is 0.15% higher than that of XLI (1.4% vs. 1.25%). Also, XLV yielded on average 0.58% more per year over the past decade (15.02% vs. 14.44%). XLV and XLI have the same expense ratio: 0.12%.

Fund Composition

Industry Exposure

XLV vs. XLI - Industry Exposure

XLV XLI
Technology 0.0% 1.82%
Industrials 0.0% 97.49%
Energy 0.0% 0.0%
Communication Services 0.0% 0.0%
Utilities 0.0% 0.0%
Healthcare 100.0% 0.0%
Consumer Defensive 0.0% 0.0%
Real Estate 0.0% 0.0%
Financial Services 0.0% 0.0%
Consumer Cyclical 0.0% 0.69%
Basic Materials 0.0% 0.0%

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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.

XLV is 100.00% more exposed to the Healthcare sector than XLI (100.0% vs 0.0%). XLV’s exposure to Technology and Industrials stocks is 1.82% lower and 97.49% lower respectively (0.0% vs. 1.82% and 0.0% vs. 97.49%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 0.69% less of the fund’s holdings compared to XLI (0.00% vs. 0.69%).

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%.

XLI - Holdings

XLI Holdings Weight
Honeywell International Inc 4.9%
United Parcel Service Inc Class B 4.84%
Union Pacific Corp 4.7%
Boeing Co 4.24%
Raytheon Technologies Corp 4.16%
Caterpillar Inc 3.84%
General Electric Co 3.8%
3M Co 3.7%
Deere & Co 3.54%
Lockheed Martin Corp 2.98%

XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.

Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.

Risk Analysis

XLV XLI
Mean Return 1.27 1.14
R-squared 58.19 78.97
Std. Deviation 12.94 17.13
Alpha 7.75 2.38
Beta 0.7 1.08
Sharpe Ratio 1.13 0.76
Treynor Ratio 21.1 11.34

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

The Industrial Select Sector SPDR Fund (XLI) has a R-squared of 78.97 with a Sharpe Ratio of 0.76 and a Beta of 1.08. Its Treynor Ratio is 11.34 while XLI’s Standard Deviation is 17.13. Furthermore, the fund has a Alpha of 2.38 and a Mean Return of 1.14.

XLV’s Mean Return is 0.13 points higher than that of XLI and its R-squared is 20.78 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than XLI. The Alpha and Beta of XLV are 5.37 points higher and 0.38 points lower than XLI’s Alpha and Beta.

Performance

Annual Returns

XLV vs. XLI - Annual Returns

Year XLV XLI
2020 13.33% 11.0%
2019 20.63% 29.11%
2018 6.3% -13.1%
2017 21.7% 23.85%
2016 -2.83% 19.93%
2015 6.82% -4.27%
2014 25.17% 10.44%
2013 41.24% 40.44%
2012 17.56% 14.86%
2011 12.44% -1.01%
2010 2.91% 27.62%

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 XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.

Portfolio Growth

XLV vs. XLI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
XLI $10,000 $39,853 14.44%

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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.

XLV’s CAGR is 0.58 percentage points higher than that of XLI and as a result, would have yielded $4,294 more on a $10,000 investment. Thus, XLV outperformed XLI by 0.58% 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