The Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. BNDX is a Vanguard N/A fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between BNDX and XLY? And which fund is better?
The expense ratio of BNDX is 0.04 percentage points lower than XLY’s (0.08% vs. 0.12%). BNDX is mostly comprised of A bonds while XLY has a high exposure to the consumer cyclical sector. Overall, BNDX has provided lower returns than XLY over the past ten years.
In this article, we’ll compare BNDX vs. XLY. We’ll look at fund composition and annual returns, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss BNDX’s and XLY’s holdings, portfolio growth, and performance and examine how these affect their overall returns.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
Summary
| BNDX | XLY | |
| Name | Vanguard Total International Bond Index Fund ETF Shares | Consumer Discretionary Select Sector SPDR Fund |
| Category | N/A | Consumer Cyclical |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 116.41B | 20.21B |
| Avg. Return | 4.63% | 18.86% |
| Div. Yield | 0.94% | 0.63% |
| Expense Ratio | 0.08% | 0.12% |
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) is a N/A fund that is issued by Vanguard. It currently has 116.41B total assets under management and has yielded an average annual return of 4.63% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.08%.
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%.
BNDX’s dividend yield is 0.31% higher than that of XLY (0.94% vs. 0.63%). Also, BNDX yielded on average 14.23% less per year over the past decade (4.63% vs. 18.86%). The expense ratio of BNDX is 0.04 percentage points lower than XLY’s (0.08% vs. 0.12%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
Fund Composition
Holdings
| BNDX Bond Sectors | Weight |
| A | 29.19% |
| AA | 26.79% |
| AAA | 21.59% |
| BBB | 19.41% |
| Others | 1.57% |
| Below B | 1.45% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BNDX’s Top Bond Sectors are ratings of A, AA, AAA, BBB, and Others at 29.19%, 26.79%, 21.59%, 19.41%, and 1.57%. The fund is less weighted towards Below B (1.45%), B (0.0%), and BB (0.0%) rated bonds.
| XLY Holdings | Weight |
| Amazon.com Inc | 22.9% |
| Tesla Inc | 13.5% |
| The Home Depot Inc | 8.74% |
| McDonald’s Corp | 4.5% |
| Nike Inc B | 4.45% |
| Lowe’s Companies Inc | 3.58% |
| Starbucks Corp | 3.44% |
| Target Corp | 3.12% |
| Booking Holdings Inc | 2.35% |
| TJX Companies Inc | 2.12% |
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%.
Risk Analysis
| BNDX | XLY | |
| Mean Return | 0 | 1.47 |
| R-squared | 0 | 80.84 |
| Std. Deviation | 0 | 15.97 |
| Alpha | 0 | 6.96 |
| Beta | 0 | 1.02 |
| Sharpe Ratio | 0 | 1.06 |
| Treynor Ratio | 0 | 16.69 |
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Standard Deviation of 0 with a Beta of 0 and a Treynor Ratio of 0. Its R-squared is 0 while BNDX’s Alpha is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.
The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Beta of 1.02 with a Treynor Ratio of 16.69 and a R-squared of 80.84. Its Alpha is 6.96 while XLY’s Mean Return is 1.47. Furthermore, the fund has a Sharpe Ratio of 1.06 and a Standard Deviation of 15.97.
BNDX’s Mean Return is 1.47 points lower than that of XLY and its R-squared is 80.84 points lower. With a Standard Deviation of 0, BNDX is slightly less volatile than XLY. The Alpha and Beta of BNDX are 6.96 points lower and 1.02 points lower than XLY’s Alpha and Beta.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
Performance
Annual Returns
| Year | BNDX | XLY |
| 2020 | 4.6% | 29.66% |
| 2019 | 7.88% | 28.43% |
| 2018 | 2.94% | 1.66% |
| 2017 | 2.4% | 22.77% |
| 2016 | 4.67% | 5.87% |
| 2015 | 1.08% | 9.93% |
| 2014 | 8.83% | 9.49% |
| 2013 | 0.0% | 42.74% |
| 2012 | 0.0% | 23.6% |
| 2011 | 0.0% | 5.98% |
| 2010 | 0.0% | 27.36% |
BNDX had its best year in 2014 with an annual return of 8.83%. BNDX’s worst year over the past decade yielded 0.0% and occurred in 2013. In most years the Vanguard Total International Bond Index Fund ETF Shares provided moderate returns such as in 2015, 2017, and 2018 where annual returns amounted to 1.08%, 2.4%, and 2.94% respectively.
The year 2013 was the strongest year for XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BNDX | $10,000 | $13,695 | 4.63% |
| XLY | $10,000 | $26,483 | 18.86% |
A $10,000 investment in BNDX would have resulted in a final balance of $13,695. This is a profit of $3,695 over 7 years and amounts to a compound annual growth rate (CAGR) of 4.63%.
With a $10,000 investment in XLY, the end total would have been $26,483. This equates to a $16,483 profit over 7 years and a compound annual growth rate (CAGR) of 18.86%.
BNDX’s CAGR is 14.23 percentage points lower than that of XLY and as a result, would have yielded $12,788 less on a $10,000 investment. Thus, BNDX performed worse than XLY by 14.23% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
