XLY vs. ACWI: What’s The Difference?

The Consumer Discretionary Select Sector SPDR Fund (XLY) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. XLY is a SPDR State Street Global Advisors Consumer Cyclical fund and ACWI is a iShares N/A fund. So, what’s the difference between XLY and ACWI? And which fund is better?

The expense ratio of XLY is 0.20 percentage points lower than ACWI’s (0.12% vs. 0.32%). XLY also has a higher exposure to the consumer cyclical sector and a higher standard deviation. Overall, XLY has provided higher returns than ACWI over the past 11 years.

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

Summary

XLY ACWI
Name Consumer Discretionary Select Sector SPDR Fund iShares MSCI ACWI ETF
Category Consumer Cyclical N/A
Issuer SPDR State Street Global Advisors iShares
AUM 20.21B 16.85B
Avg. Return 18.86% 10.21%
Div. Yield 0.63% 1.39%
Expense Ratio 0.12% 0.32%

The Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

XLY’s dividend yield is 0.76% lower than that of ACWI (0.63% vs. 1.39%). Also, XLY yielded on average 8.65% more per year over the past decade (18.86% vs. 10.21%). The expense ratio of XLY is 0.20 percentage points lower than ACWI’s (0.12% vs. 0.32%).

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Fund Composition

Industry Exposure

XLY vs. ACWI - Industry Exposure

XLY ACWI
Technology 0.57% 20.41%
Industrials 0.0% 9.65%
Energy 0.0% 3.48%
Communication Services 0.0% 9.87%
Utilities 0.0% 2.61%
Healthcare 0.0% 11.74%
Consumer Defensive 5.34% 7.15%
Real Estate 0.0% 2.75%
Financial Services 0.0% 15.58%
Consumer Cyclical 94.1% 12.01%
Basic Materials 0.0% 4.73%

The Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

XLY is 82.09% more exposed to the Consumer Cyclical sector than ACWI (94.1% vs 12.01%). XLY’s exposure to Consumer Defensive and Technology stocks is 1.81% lower and 19.84% lower respectively (5.34% vs. 7.15% and 0.57% vs. 20.41%). In total, Financial Services, Real Estate, and Healthcare also make up 30.07% less of the fund’s holdings compared to ACWI (0.00% vs. 30.07%).

Holdings

XLY - Holdings

XLY Holdings Weight
Amazon.com Inc 22.9%
Tesla Inc 13.5%
The Home Depot Inc 8.74%
McDonald’s Corp 4.5%
Nike Inc B 4.45%
Lowe’s Companies Inc 3.58%
Starbucks Corp 3.44%
Target Corp 3.12%
Booking Holdings Inc 2.35%
TJX Companies Inc 2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

XLY ACWI
Mean Return 1.47 0.89
R-squared 80.84 99.96
Std. Deviation 15.97 14.05
Alpha 6.96 0.15
Beta 1.02 1
Sharpe Ratio 1.06 0.71
Treynor Ratio 16.69 9.45

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Standard Deviation of 15.97 with a Treynor Ratio of 16.69 and a Beta of 1.02. Its Mean Return is 1.47 while XLY’s R-squared is 80.84. Furthermore, the fund has a Sharpe Ratio of 1.06 and a Alpha of 6.96.

The iShares MSCI ACWI ETF (ACWI) has a Treynor Ratio of 9.45 with a R-squared of 99.96 and a Standard Deviation of 14.05. Its Beta is 1 while ACWI’s Alpha is 0.15. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Mean Return of 0.89.

XLY’s Mean Return is 0.58 points higher than that of ACWI and its R-squared is 19.12 points lower. With a Standard Deviation of 15.97, XLY is slightly more volatile than ACWI. The Alpha and Beta of XLY are 6.81 points higher and 0.02 points higher than ACWI’s Alpha and Beta.

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Performance

Annual Returns

XLY vs. ACWI - Annual Returns

Year XLY ACWI
2020 29.66% 16.38%
2019 28.43% 26.7%
2018 1.66% -9.15%
2017 22.77% 24.35%
2016 5.87% 8.22%
2015 9.93% -2.39%
2014 9.49% 4.64%
2013 42.74% 22.91%
2012 23.6% 15.99%
2011 5.98% -7.6%
2010 27.36% 12.31%

XLY had its best year in 2013 with an annual return of 42.74%. XLY’s worst year over the past decade yielded 1.66% and occurred in 2018. In most years the Consumer Discretionary Select Sector SPDR Fund provided moderate returns such as in 2015, 2017, and 2012 where annual returns amounted to 9.93%, 22.77%, and 23.6% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

XLY vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLY $10,000 $63,066 18.86%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in XLY would have resulted in a final balance of $63,066. This is a profit of $53,066 over 11 years and amounts to a compound annual growth rate (CAGR) of 18.86%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

XLY’s CAGR is 8.65 percentage points higher than that of ACWI and as a result, would have yielded $35,825 more on a $10,000 investment. Thus, XLY outperformed ACWI by 8.65% annually.


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