XLY vs. IWP: What’s The Difference?

The Consumer Discretionary Select Sector SPDR Fund (XLY) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. XLY is a SPDR State Street Global Advisors Consumer Cyclical fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between XLY and IWP? And which fund is better?

The expense ratio of XLY is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%). XLY also has a higher exposure to the consumer cyclical sector and a lower standard deviation. Overall, XLY has provided higher returns than IWP over the past 11 years.

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

Summary

XLY IWP
Name Consumer Discretionary Select Sector SPDR Fund iShares Russell Mid-Cap Growth ETF
Category Consumer Cyclical Mid-Cap Growth
Issuer SPDR State Street Global Advisors iShares
AUM 20.21B 15.7B
Avg. Return 18.86% 16.75%
Div. Yield 0.63% 0.26%
Expense Ratio 0.12% 0.24%

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 Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

XLY’s dividend yield is 0.37% higher than that of IWP (0.63% vs. 0.26%). Also, XLY yielded on average 2.11% more per year over the past decade (18.86% vs. 16.75%). The expense ratio of XLY is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%).

Fund Composition

Industry Exposure

XLY vs. IWP - Industry Exposure

XLY IWP
Technology 0.57% 33.88%
Industrials 0.0% 14.09%
Energy 0.0% 1.51%
Communication Services 0.0% 6.32%
Utilities 0.0% 0.16%
Healthcare 0.0% 16.79%
Consumer Defensive 5.34% 2.32%
Real Estate 0.0% 2.46%
Financial Services 0.0% 4.52%
Consumer Cyclical 94.1% 16.09%
Basic Materials 0.0% 1.86%

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 Russell Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

XLY is 78.01% more exposed to the Consumer Cyclical sector than IWP (94.1% vs 16.09%). XLY’s exposure to Consumer Defensive and Technology stocks is 3.02% higher and 33.31% lower respectively (5.34% vs. 2.32% and 0.57% vs. 33.88%). In total, Financial Services, Real Estate, and Healthcare also make up 23.77% less of the fund’s holdings compared to IWP (0.00% vs. 23.77%).

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%.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

Risk Analysis

XLY IWP
Mean Return 1.47 1.27
R-squared 80.84 87.01
Std. Deviation 15.97 16.05
Alpha 6.96 -1.03
Beta 1.02 1.1
Sharpe Ratio 1.06 0.91
Treynor Ratio 16.69 12.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Alpha of -1.03 with a Beta of 1.1 and a Mean Return of 1.27. Its Sharpe Ratio is 0.91 while IWP’s Standard Deviation is 16.05. Furthermore, the fund has a Treynor Ratio of 12.98 and a R-squared of 87.01.

XLY’s Mean Return is 0.20 points higher than that of IWP and its R-squared is 6.17 points lower. With a Standard Deviation of 15.97, XLY is slightly less volatile than IWP. The Alpha and Beta of XLY are 7.99 points higher and 0.08 points lower than IWP’s Alpha and Beta.

Performance

Annual Returns

XLY vs. IWP - Annual Returns

Year XLY IWP
2020 29.66% 35.29%
2019 28.43% 35.14%
2018 1.66% -4.95%
2017 22.77% 24.98%
2016 5.87% 7.15%
2015 9.93% -0.39%
2014 9.49% 11.68%
2013 42.74% 35.44%
2012 23.6% 15.62%
2011 5.98% -1.82%
2010 27.36% 26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

XLY vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLY $10,000 $63,066 18.86%
IWP $10,000 $50,191 16.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

XLY’s CAGR is 2.11 percentage points higher than that of IWP and as a result, would have yielded $12,875 more on a $10,000 investment. Thus, XLY outperformed IWP by 2.11% annually.


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