IEFA vs XLF: Correlation & Overlap
Measured on weekly returns over the past three years, iShares Core MSCI EAFE ETF (IEFA) and Financial Select Sector SPDR Fund (XLF) carry a correlation of 0.60, a strong link. Looking through to holdings, 0.4% of the two portfolios is the same by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IEFA and XLF?
Over the past 3 years, IEFA and XLF moved with a correlation of 0.60, which is strong. The past 12 months show a weaker link (0.48) than the 3-year average (0.60). Over 5 years the correlation is 0.70, and the annualized covariance of weekly returns is 145.2 %².
Within IEFA's tracked universe of 111 assets, XLF comes in at #67 by 3-year correlation. On 12-month performance IEFA holds a 12.5-point edge, +21.8% against +9.3%. On a rolling one-year basis the correlation drifted between 0.36 and 0.82, a moderate band.
How is this computed?
Pearson correlation on weekly returns: ρ(A,B) = cov(rA, rB) / (σA · σB), over windows of 52, 156 and 260 weeks. Covariance is annualized (×52) and expressed in %². Full definitions on the methodology page.
IEFA vs XLF: side by side
| IEFA (iShares Core MSCI EAFE ETF) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.8% | +9.3% |
| 5-year return | +54.5% | +64.2% |
| Volatility (ann.) | 15.0% | 16.2% |
| Beta vs S&P 500 | 0.77 | 0.84 |
| Max drawdown (3Y) | -13.8% | -15.5% |
| Dividend yield | 3.35% | 1.42% |
| Expense ratio | 0.07% | 0.08% |
| Assets under management | $190.1B | $57.9B |
| Sector / category | ETF · International | Sector ETF |
IEFA, iShares's Foreign Large Blend fund, carries $190.1B under management, 1620 holdings, a 0.07% expense ratio, a 3.35% trailing dividend yield. XLF is a Financial fund from State Street Investment Management: $57.9B under management, 77 holdings, a 0.08% expense ratio, a 1.42% trailing dividend yield.
Portfolio overlap between IEFA and XLF
The two portfolios are largely distinct. Weighing the shared positions, 0.4% of the two funds is identical, spread across 6 common holdings. That shared book is a large part of why the returns line up.
| Common holding | Weight in IEFA | Weight in XLF |
|---|---|---|
| PRU | 0.17% | 0.51% |
| ALL | 0.09% | 0.82% |
| HBAN | 0.08% | 0.42% |
| AMP | 0.03% | 0.61% |
| BEN | 0.02% | 0.13% |
| RF | 0.01% | 0.32% |
Largest positions held only by IEFA: ASML (2.57%), HSBA (1.35%), ROP (1.22%), SAN (1.17%), NOVN (1.10%). Only by XLF: JPM (11.61%), BRK.B (11.25%), V (7.74%), MA (5.87%), BAC (4.94%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 6 common positions shown.
Year-by-year returns
| Year | IEFA | XLF |
|---|---|---|
| 2022 | -15.2% | -10.6% |
| 2023 | +18.0% | +12.0% |
| 2024 | +3.3% | +30.6% |
| 2025 | +32.1% | +14.9% |
| 2026 | +14.5% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IEFA and XLF good diversifiers for each other?
Somewhat, no more. With 0.60 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between IEFA and XLF?
Using weekly returns as of 2026-08-27: 0.60 over 3 years, with 0.48 over the last year and 0.70 over 5 years.
Is XLF a good diversifier for IEFA?
Somewhat, no more. With 0.60 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do IEFA and XLF overlap?
The two funds share 6 holdings amounting to 0.4% of weight, per issuer portfolio files dated 2026-08-26.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/iefa-vs-xlf.json
Embed this badge (it refreshes with the data), with attribution:
[](https://www.pairbook.io/pair/iefa-vs-xlf/)
Free with attribution; caching and terms are described in the API documentation.
Related comparisons
Hubs: IEFA correlations · XLF correlations
