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BNDX vs. XLY: What’s The Difference?

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.

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Summary

BNDXXLY
NameVanguard Total International Bond Index Fund ETF SharesConsumer Discretionary Select Sector SPDR Fund
CategoryN/AConsumer Cyclical
IssuerVanguardSPDR State Street Global Advisors
AUM116.41B20.21B
Avg. Return4.63%18.86%
Div. Yield0.94%0.63%
Expense Ratio0.08%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%).

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Fund Composition

Holdings

BNDX - Holdings

BNDX Bond SectorsWeight
A29.19%
AA26.79%
AAA21.59%
BBB19.41%
Others1.57%
Below B1.45%
B0.0%
BB0.0%
US Government0.0%

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

XLY HoldingsWeight
Amazon.com Inc22.9%
Tesla Inc13.5%
The Home Depot Inc8.74%
McDonald’s Corp4.5%
Nike Inc B4.45%
Lowe’s Companies Inc3.58%
Starbucks Corp3.44%
Target Corp3.12%
Booking Holdings Inc2.35%
TJX Companies Inc2.12%

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%.

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Risk Analysis

BNDXXLY
Mean Return01.47
R-squared080.84
Std. Deviation015.97
Alpha06.96
Beta01.02
Sharpe Ratio01.06
Treynor Ratio016.69

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.

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Performance

Annual Returns

BNDX vs. XLY - Annual Returns

YearBNDXXLY
20204.6%29.66%
20197.88%28.43%
20182.94%1.66%
20172.4%22.77%
20164.67%5.87%
20151.08%9.93%
20148.83%9.49%
20130.0%42.74%
20120.0%23.6%
20110.0%5.98%
20100.0%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

BNDX vs. XLY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BNDX$10,000$13,6954.63%
XLY$10,000$26,48318.86%

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.


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