XLY vs. EFV: What’s The Difference?

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

The expense ratio of XLY is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%). XLY also has a higher exposure to the consumer cyclical sector and a lower standard deviation. Overall, XLY has provided higher returns than EFV over the past 11 years.

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

Summary

XLY EFV
Name Consumer Discretionary Select Sector SPDR Fund iShares MSCI EAFE Value ETF
Category Consumer Cyclical Foreign Large Value
Issuer SPDR State Street Global Advisors iShares
AUM 20.21B 14.37B
Avg. Return 18.86% 3.99%
Div. Yield 0.63% 2.94%
Expense Ratio 0.12% 0.39%

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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.

XLY’s dividend yield is 2.31% lower than that of EFV (0.63% vs. 2.94%). Also, XLY yielded on average 14.87% more per year over the past decade (18.86% vs. 3.99%). The expense ratio of XLY is 0.27 percentage points lower than EFV’s (0.12% vs. 0.39%).

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Fund Composition

Industry Exposure

XLY vs. EFV - Industry Exposure

XLY EFV
Technology 0.57% 2.98%
Industrials 0.0% 11.6%
Energy 0.0% 6.6%
Communication Services 0.0% 6.46%
Utilities 0.0% 6.14%
Healthcare 0.0% 9.19%
Consumer Defensive 5.34% 6.82%
Real Estate 0.0% 5.06%
Financial Services 0.0% 26.55%
Consumer Cyclical 94.1% 9.0%
Basic Materials 0.0% 9.59%

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 EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.

EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.

XLY is 85.10% more exposed to the Consumer Cyclical sector than EFV (94.1% vs 9.0%). XLY’s exposure to Consumer Defensive and Technology stocks is 1.48% lower and 2.41% lower respectively (5.34% vs. 6.82% and 0.57% vs. 2.98%). In total, Financial Services, Real Estate, and Healthcare also make up 40.80% less of the fund’s holdings compared to EFV (0.00% vs. 40.80%).

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%.

EFV - Holdings

EFV Holdings Weight
Novartis AG 2.41%
Toyota Motor Corp 2.21%
Commonwealth Bank of Australia 1.59%
Siemens AG 1.45%
Sanofi SA 1.42%
HSBC Holdings PLC 1.4%
TotalEnergies SE 1.35%
Allianz SE 1.23%
GlaxoSmithKline PLC 1.18%
Rio Tinto PLC 1.1%

EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.

HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.

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Risk Analysis

XLY EFV
Mean Return 1.47 0.42
R-squared 80.84 92.15
Std. Deviation 15.97 16.53
Alpha 6.96 -1.77
Beta 1.02 1.05
Sharpe Ratio 1.06 0.26
Treynor Ratio 16.69 2.92

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

The iShares MSCI EAFE Value ETF (EFV) has a Treynor Ratio of 2.92 with a Sharpe Ratio of 0.26 and a Standard Deviation of 16.53. Its Mean Return is 0.42 while EFV’s R-squared is 92.15. Furthermore, the fund has a Beta of 1.05 and a Alpha of -1.77.

XLY’s Mean Return is 1.05 points higher than that of EFV and its R-squared is 11.31 points lower. With a Standard Deviation of 15.97, XLY is slightly less volatile than EFV. The Alpha and Beta of XLY are 8.73 points higher and 0.03 points lower than EFV’s Alpha and Beta.

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Performance

Annual Returns

XLY vs. EFV - Annual Returns

Year XLY EFV
2020 29.66% -2.78%
2019 28.43% 15.97%
2018 1.66% -14.88%
2017 22.77% 21.22%
2016 5.87% 4.87%
2015 9.93% -5.89%
2014 9.49% -5.65%
2013 42.74% 22.61%
2012 23.6% 17.52%
2011 5.98% -12.24%
2010 27.36% 3.18%

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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.

Portfolio Growth

XLY vs. EFV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLY $10,000 $63,066 18.86%
EFV $10,000 $14,134 3.99%

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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.

XLY’s CAGR is 14.87 percentage points higher than that of EFV and as a result, would have yielded $48,932 more on a $10,000 investment. Thus, XLY outperformed EFV by 14.87% annually.


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