IWM vs. XHB

Last updated Jul 21, 2026

IWM (iShares Russell 2000 ETF) and XHB (SPDR S&P Homebuilders ETF) are both exchange-traded funds - IWM is a Small Cap Blend Equities fund tracking the Russell 2000 Index, while XHB is a Building & Construction fund tracking the S&P Homebuilders Select Industry Index. Both are passively managed. Over the past 10 years, IWM returned 10.65%/yr vs 12.48%/yr for XHB. A 0.76 correlation means they provide meaningful diversification when combined. IWM charges 0.19%/yr vs 0.35%/yr for XHB.

Performance

IWM vs. XHB - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in iShares Russell 2000 ETF (IWM) and SPDR S&P Homebuilders ETF (XHB). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, IWM achieves a 19.24% return, which is significantly higher than XHB's 3.33% return. Over the past 10 years, IWM has underperformed XHB with an annualized return of 10.65%, while XHB has yielded a comparatively higher 12.48% annualized return.

IWM

• 1D: -0.59%
• 1M: -1.11%
• 6M: 10.45%
• YTD: 19.24%
• 1Y: 32.84%
• 3Y*: 15.91%
• 5Y*: 6.97%
• 10Y*: 10.65%
• ALL TIME*: 8.76%

XHB

• 1D: -2.01%
• 1M: -4.34%
• 6M: -7.13%
• YTD: 3.33%
• 1Y: 5.21%
• 3Y*: 9.51%
• 5Y*: 8.51%
• 10Y*: 12.48%
• ALL TIME*: 5.18%

*Multi-year figures are annualized to reflect compound growth (CAGR)

IWM vs. XHB - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
IWM iShares Russell 2000 ETF	19.24%	12.66%	11.38%	16.83%	-20.48%	14.54%	20.03%	25.39%	-11.12%	14.58%
XHB SPDR S&P Homebuilders ETF	3.33%	-0.69%	9.87%	60.10%	-28.93%	49.70%	27.97%	41.30%	-25.73%	31.80%

Correlation

The correlation between IWM and XHB is 0.64, which is moderate. They share some common price drivers but move independently often enough to provide real diversification benefit when combined.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.64
Correlation (3Y) Calculated over the trailing 3-year period	0.73
Correlation (5Y) Calculated over the trailing 5-year period	0.77
Correlation (10Y) Calculated over the trailing 10-year period	0.76
Correlation (All Time) Calculated using the full available price history since Feb 6, 2006	0.76

The correlation between IWM and XHB shifts across timeframes, from 0.64 (1 year) to 0.77 (5 years), reflecting how their relationship changes across market environments.

IWM vs. XHB - Sectors Allocation Comparison

Sectors	IWM	XHB
Healthcare	20.5%	-
Financial Services	17.9%	-
Technology	14.3%	-
Industrials	13.9%	38.2%
Consumer Cyclical	9.0%	60.4%
Real Estate	6.6%	1.3%
Energy	5.8%	-
Basic Materials	4.3%	14.4%
Utilities	2.9%	-
Consumer Defensive	2.6%	3.5%
Communication Services	1.9%	-

Return for Risk

IWM vs. XHB — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

IWM

IWM Risk / Return Rank: 72
IWM Sharpe Ratio Rank: 71
IWM Sortino Ratio Rank: 72
IWM Omega Ratio Rank: 64
IWM Calmar Ratio Rank: 78
IWM Martin Ratio Rank: 77

XHB

XHB Risk / Return Rank: 14
XHB Sharpe Ratio Rank: 14
XHB Sortino Ratio Rank: 15
XHB Omega Ratio Rank: 14
XHB Calmar Ratio Rank: 14
XHB Martin Ratio Rank: 13

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

IWM vs. XHB - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for iShares Russell 2000 ETF (IWM) and SPDR S&P Homebuilders ETF (XHB). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.

	IWM	XHB	Difference
Sharpe ratio: Return per unit of total volatility	1.71	0.18	+1.52
Sortino ratio: Return per unit of downside risk	2.44	0.52	+1.92
Omega ratio: Gain probability vs. loss probability	1.29	1.06	+0.23
Calmar ratio: Return relative to maximum drawdown	2.99	0.24	+2.75
Martin ratio: Return relative to average drawdown	10.54	0.48	+10.06

IWM vs. XHB - Sharpe Ratio Comparison

The current IWM Sharpe Ratio is 1.71, which is higher than the XHB Sharpe Ratio of 0.18. The chart below compares the historical Sharpe Ratios of IWM and XHB, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Drawdowns

IWM vs. XHB - Drawdown Comparison

The maximum IWM drawdown since its inception was -59.05%, smaller than the maximum XHB drawdown of -81.61%. Use the drawdown chart below to compare losses from any high point for IWM and XHB.

Drawdown Indicators

	IWM	XHB	Difference
Max Drawdown Largest peak-to-trough decline	-59.05%	-81.61%	+22.56%
Max Drawdown (1Y) Largest decline over 1 year	-11.03%	-21.71%	+10.68%
Max Drawdown (3Y) Largest decline over 3 years	-27.50%	-30.53%	+3.03%
Max Drawdown (5Y) Largest decline over 5 years	-31.91%	-39.46%	+7.55%
Max Drawdown (10Y) Largest decline over 10 years	-41.13%	-49.57%	+8.44%
Current Drawdown Current decline from peak	-2.71%	-14.44%	+11.73%
Average Drawdown Average peak-to-trough decline	-10.72%	-27.50%	+16.78%
Ulcer Index Depth and duration of drawdowns from previous peaks	3.12%	10.86%	-7.74%

Volatility

IWM vs. XHB - Volatility Comparison

The current volatility for iShares Russell 2000 ETF (IWM) is 3.62%, while SPDR S&P Homebuilders ETF (XHB) has a volatility of 9.53%. This indicates that IWM experiences smaller price fluctuations and is considered to be less risky than XHB based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	IWM	XHB	Difference
Volatility (1M) Calculated over the trailing 1-month period	3.62%	9.53%	-5.91%
Volatility (6M) Calculated over the trailing 6-month period	14.17%	21.48%	-7.31%
Volatility (1Y) Calculated over the trailing 1-year period	19.38%	28.65%	-9.27%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	22.49%	27.98%	-5.49%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	23.00%	27.57%	-4.57%

IWM vs. XHB - Expense Ratio Comparison

IWM has a 0.19% expense ratio, which is lower than XHB's 0.35% expense ratio.

Dividends

IWM vs. XHB - Dividend Comparison

IWM's dividend yield for the trailing twelve months is around 0.91%, more than XHB's 0.61% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
IWM iShares Russell 2000 ETF	0.91%	1.04%	1.15%	1.35%	1.48%	0.94%	1.04%	1.26%	1.40%	1.26%	1.38%	1.54%
XHB SPDR S&P Homebuilders ETF	0.61%	0.78%	0.59%	0.77%	1.06%	0.51%	0.73%	0.89%	1.25%	0.72%	0.67%	0.50%

Frequently Asked Questions

Can I hold both IWM and XHB in my portfolio?

IWM and XHB have a correlation of 0.64, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, IWM or XHB?

XHB has higher volatility (9.53%) compared to IWM (3.62%). In terms of maximum drawdown, IWM dropped -59.05% vs XHB's -81.61%.

Which ETF is better, IWM or XHB?

On 10-year performance, XHB leads with 12.48% vs 10.65% for IWM. On fees, IWM is cheaper at 0.19% per year. On volatility, IWM has been the lower-risk option at 3.62%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, IWM or XHB?

Over the 10-year period, XHB has performed better with a 12.48% return vs 10.65%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, IWM or XHB?

IWM is cheaper with a 0.19% expense ratio, compared with 0.35% for XHB.

Which ETF pays a higher dividend yield, IWM or XHB?

IWM has the higher dividend yield at 0.91%, compared with 0.61% for XHB.

What is the main difference between IWM and XHB?

IWM is categorized as Small Cap Blend Equities, while XHB is Building & Construction. IWM tracks Russell 2000 Index, while XHB tracks S&P Homebuilders Select Industry Index. They also come from different issuers: iShares and State Street. Their fees differ too: 0.19% for IWM and 0.35% for XHB.

Which has better risk-adjusted returns?

IWM currently has the higher Sharpe Ratio (1.71 vs 0.18), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.