XLI vs XLB: Head-to-Head Comparison

Side-by-Side Comparison

Key Differences Between XLI and XLB

XLI (Industrial Select Sector SPDR Fund) is a industrials sector fund managed by State Street Global Advisors. XLI provides exposure to the industrial sector of the S&P 500, including aerospace and defense, machinery, railroads, construction, and business services companies. Industrials are considered cyclical because their profits are closely tied to economic growth and infrastructure spending. Beginners should know that XLI tends to outperform during economic expansions but can underperform when growth slows.

XLB (Materials Select Sector SPDR Fund) is a materials sector fund managed by State Street Global Advisors. XLB holds the materials sector companies from the S&P 500, including chemical producers, mining companies, packaging firms, and building materials makers. Materials companies provide the raw inputs that other industries need to manufacture their products. Beginners should know that XLB is a cyclical, commodity-sensitive fund that tends to do well when the economy is growing and commodity prices are rising.

The most notable differences are in fees (0.09% vs 0.09%), number of holdings (78 vs 28), and 5-year returns (11.80% vs 9.50%).

Holdings Overlap Analysis

XLI and XLB share only 0% of their top holdings. These funds are quite different, making them complementary choices if you want broader market coverage.

Cost Comparison Over Time

If you invest $10,000 and hold for 20 years (assuming 8% annual returns):

Over 20 years, the fee difference amounts to $0 on a $10,000 investment. The cost difference is negligible — choose based on other factors.

Which One Should a Beginner Choose?

Choose XLI if: You want investors who want cyclical exposure that benefits from economic growth and infrastructure spending, those bullish on u.s. manufacturing reshoring and defense spending trends, tactical investors who rotate into industrials during early-to-mid economic expansion phases. It's managed by State Street Global Advisors with an expense ratio of 0.09%.

Choose XLB if: You want investors seeking commodity exposure through equities rather than directly buying commodities, those who want to position for infrastructure spending and construction material demand, tactical investors who rotate into materials during inflationary or early-cycle economic periods. It's managed by State Street Global Advisors with an expense ratio of 0.09%.

Can You Own Both XLI and XLB?

Absolutely! With only 0% overlap, XLI and XLB complement each other well. A simple portfolio might allocate 60% to one and 40% to the other, or you could pair them with a bond ETF like BND for a complete three-fund portfolio.

Frequently Asked Questions