XLI vs XLE: Head-to-Head Comparison

Side-by-Side Comparison

Key Differences Between XLI and XLE

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.

XLE (Energy Select Sector SPDR Fund) is a energy sector fund managed by State Street Global Advisors. XLE holds the energy companies from the S&P 500, including major oil and gas producers, refiners, and energy equipment providers. It is the most popular way to get targeted exposure to the traditional energy sector. Beginners should understand that XLE is heavily tied to oil and gas prices, making it a cyclical investment that can deliver strong returns when energy prices rise but suffer during downturns.

The most notable differences are in fees (0.09% vs 0.09%), number of holdings (78 vs 23), and 5-year returns (11.80% vs 14.20%).

Holdings Overlap Analysis

XLI and XLE 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 XLE if: You want investors who want to overweight energy based on their outlook for oil and gas prices, income seekers attracted to the high dividends paid by profitable energy companies, tactical investors using energy as an inflation hedge during rising commodity price environments. It's managed by State Street Global Advisors with an expense ratio of 0.09%.

Can You Own Both XLI and XLE?

Absolutely! With only 0% overlap, XLI and XLE 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