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

XLY and XLI have the same expense ratio: 0.12%. XLY also has a higher exposure to the consumer cyclical sector and a lower standard deviation. Overall, XLY has provided higher returns than XLI over the past 11 years.

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

Summary

XLYXLI
NameConsumer Discretionary Select Sector SPDR FundIndustrial Select Sector SPDR Fund
CategoryConsumer CyclicalIndustrials
IssuerSPDR State Street Global AdvisorsSPDR State Street Global Advisors
AUM20.21B19.33B
Avg. Return18.86%14.44%
Div. Yield0.63%1.25%
Expense Ratio0.12%0.12%

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 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%.

XLY’s dividend yield is 0.62% lower than that of XLI (0.63% vs. 1.25%). Also, XLY yielded on average 4.42% more per year over the past decade (18.86% vs. 14.44%). XLY and XLI have the same expense ratio: 0.12%.

Fund Composition

Industry Exposure

XLY vs. XLI - Industry Exposure

XLYXLI
Technology0.57%1.82%
Industrials0.0%97.49%
Energy0.0%0.0%
Communication Services0.0%0.0%
Utilities0.0%0.0%
Healthcare0.0%0.0%
Consumer Defensive5.34%0.0%
Real Estate0.0%0.0%
Financial Services0.0%0.0%
Consumer Cyclical94.1%0.69%
Basic Materials0.0%0.0%

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 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%.

XLY is 93.41% more exposed to the Consumer Cyclical sector than XLI (94.1% vs 0.69%). XLY’s exposure to Consumer Defensive and Technology stocks is 5.34% higher and 1.25% lower respectively (5.34% vs. 0.0% and 0.57% vs. 1.82%). In total, Financial Services, Real Estate, and Healthcare also make up 0.00% less of the fund’s holdings compared to XLI (0.00% vs. 0.00%).

Holdings

XLY - Holdings

XLY HoldingsWeight
Amazon.com Inc22.9%
Tesla Inc13.5%
The Home Depot Inc8.74%
McDonald’s Corp4.5%
Nike Inc B4.45%
Lowe’s Companies Inc3.58%
Starbucks Corp3.44%
Target Corp3.12%
Booking Holdings Inc2.35%
TJX Companies Inc2.12%

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%.

XLI - Holdings

XLI HoldingsWeight
Honeywell International Inc4.9%
United Parcel Service Inc Class B4.84%
Union Pacific Corp4.7%
Boeing Co4.24%
Raytheon Technologies Corp4.16%
Caterpillar Inc3.84%
General Electric Co3.8%
3M Co3.7%
Deere & Co3.54%
Lockheed Martin Corp2.98%

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

XLYXLI
Mean Return1.471.14
R-squared80.8478.97
Std. Deviation15.9717.13
Alpha6.962.38
Beta1.021.08
Sharpe Ratio1.060.76
Treynor Ratio16.6911.34

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

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

XLY’s Mean Return is 0.33 points higher than that of XLI and its R-squared is 1.87 points higher. With a Standard Deviation of 15.97, XLY is slightly less volatile than XLI. The Alpha and Beta of XLY are 4.58 points higher and 0.06 points lower than XLI’s Alpha and Beta.

Performance

Annual Returns

XLY vs. XLI - Annual Returns

YearXLYXLI
202029.66%11.0%
201928.43%29.11%
20181.66%-13.1%
201722.77%23.85%
20165.87%19.93%
20159.93%-4.27%
20149.49%10.44%
201342.74%40.44%
201223.6%14.86%
20115.98%-1.01%
201027.36%27.62%

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 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

XLY vs. XLI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLY$10,000$63,06618.86%
XLI$10,000$39,85314.44%

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 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%.

XLY’s CAGR is 4.42 percentage points higher than that of XLI and as a result, would have yielded $23,213 more on a $10,000 investment. Thus, XLY outperformed XLI by 4.42% annually.

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