The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between BSV and XLC? And which fund is better?
The expense ratio of BSV is 0.07 percentage points lower than XLC’s (0.05% vs. 0.12%). BSV is mostly comprised of AAA bonds while XLC has a high exposure to the communication services sector. Overall, BSV has provided lower returns than XLC over the past ten years.
In this article, we’ll compare BSV vs. XLC. We’ll look at fund composition and performance, as well as at their holdings and annual returns. Moreover, I’ll also discuss BSV’s and XLC’s risk metrics, portfolio growth, and industry exposure and examine how these affect their overall returns.
Summary
| BSV | XLC | |
| Name | Vanguard Short-Term Bond Index Fund ETF Shares | Communication Services Select Sector SPDR Fund |
| Category | Short-Term Bond | Communications |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 67.71B | 14.09B |
| Avg. Return | 2.27% | 29.04% |
| Div. Yield | 1.48% | 0.62% |
| Expense Ratio | 0.05% | 0.12% |
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
The Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
BSV’s dividend yield is 0.86% higher than that of XLC (1.48% vs. 0.62%). Also, BSV yielded on average 26.76% less per year over the past decade (2.27% vs. 29.04%). The expense ratio of BSV is 0.07 percentage points lower than XLC’s (0.05% vs. 0.12%).
Fund Composition
Holdings
| BSV Bond Sectors | Weight |
| AAA | 71.65% |
| BBB | 13.08% |
| A | 11.95% |
| AA | 3.28% |
| Others | 0.03% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
Risk Analysis
| BSV | XLC | |
| Mean Return | 0.16 | 0 |
| R-squared | 78.38 | 0 |
| Std. Deviation | 1.33 | 0 |
| Alpha | 0.21 | 0 |
| Beta | 0.38 | 0 |
| Sharpe Ratio | 0.98 | 0 |
| Treynor Ratio | 3.33 | 0 |
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Mean Return of 0.16 with a Sharpe Ratio of 0.98 and a Standard Deviation of 1.33. Its R-squared is 78.38 while BSV’s Beta is 0.38. Furthermore, the fund has a Treynor Ratio of 3.33 and a Alpha of 0.21.
The Communication Services Select Sector SPDR Fund (XLC) has a R-squared of 0 with a Mean Return of 0 and a Standard Deviation of 0. Its Beta is 0 while XLC’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.
BSV’s Mean Return is 0.16 points higher than that of XLC and its R-squared is 78.38 points higher. With a Standard Deviation of 1.33, BSV is slightly more volatile than XLC. The Alpha and Beta of BSV are 0.21 points higher and 0.38 points higher than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | BSV | XLC |
| 2020 | 4.67% | 26.85% |
| 2019 | 4.92% | 31.22% |
| 2018 | 1.34% | 0.0% |
| 2017 | 1.2% | 0.0% |
| 2016 | 1.42% | 0.0% |
| 2015 | 0.92% | 0.0% |
| 2014 | 1.32% | 0.0% |
| 2013 | 0.17% | 0.0% |
| 2012 | 1.98% | 0.0% |
| 2011 | 3.04% | 0.0% |
| 2010 | 4.0% | 0.0% |
BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% respectively.
The year 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BSV | $10,000 | $10,981 | 2.27% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in BSV would have resulted in a final balance of $10,981. This is a profit of $981 over 2 years and amounts to a compound annual growth rate (CAGR) of 2.27%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
BSV’s CAGR is 26.76 percentage points lower than that of XLC and as a result, would have yielded $5,664 less on a $10,000 investment. Thus, BSV performed worse than XLC by 26.76% annually.
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