BSV vs. XLE: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between BSV and XLE? And which fund is better?

The expense ratio of BSV is 0.07 percentage points lower than XLE’s (0.05% vs. 0.12%). BSV is mostly comprised of AAA bonds while XLE has a high exposure to the energy sector. Overall, BSV has provided higher returns than XLE over the past ten years.

In this article, we’ll compare BSV vs. XLE. We’ll look at fund composition and risk metrics, as well as at their holdings and performance. Moreover, I’ll also discuss BSV’s and XLE’s industry exposure, annual returns, and portfolio growth and examine how these affect their overall returns.

Summary

BSV XLE
Name Vanguard Short-Term Bond Index Fund ETF Shares Energy Select Sector SPDR Fund
Category Short-Term Bond Equity Energy
Issuer Vanguard SPDR State Street Global Advisors
AUM 67.71B 25.55B
Avg. Return 2.27% 1.28%
Div. Yield 1.48% 3.92%
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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.

BSV’s dividend yield is 2.44% lower than that of XLE (1.48% vs. 3.92%). Also, BSV yielded on average 0.99% more per year over the past decade (2.27% vs. 1.28%). The expense ratio of BSV is 0.07 percentage points lower than XLE’s (0.05% vs. 0.12%).

Fund Composition

Holdings

BSV - 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.

XLE - Holdings

XLE Holdings Weight
Exxon Mobil Corp 23.7%
Chevron Corp 20.03%
ConocoPhillips 4.64%
EOG Resources Inc 4.46%
Schlumberger Ltd 4.43%
Marathon Petroleum Corp 4.17%
Pioneer Natural Resources Co 4.08%
Phillips 66 4.07%
Kinder Morgan Inc Class P 3.85%
Williams Companies Inc 3.5%

XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.

Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.

Risk Analysis

BSV XLE
Mean Return 0.16 0.32
R-squared 78.38 61.84
Std. Deviation 1.33 27.52
Alpha 0.21 -11.98
Beta 0.38 1.54
Sharpe Ratio 0.98 0.12
Treynor Ratio 3.33 -0.4

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Standard Deviation of 1.33 with a Sharpe Ratio of 0.98 and a Mean Return of 0.16. Its Alpha is 0.21 while BSV’s Beta is 0.38. Furthermore, the fund has a R-squared of 78.38 and a Treynor Ratio of 3.33.

The Energy Select Sector SPDR Fund (XLE) has a Mean Return of 0.32 with a Treynor Ratio of -0.4 and a Beta of 1.54. Its Sharpe Ratio is 0.12 while XLE’s Standard Deviation is 27.52. Furthermore, the fund has a R-squared of 61.84 and a Alpha of -11.98.

BSV’s Mean Return is 0.16 points lower than that of XLE and its R-squared is 16.54 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than XLE. The Alpha and Beta of BSV are 12.19 points higher and 1.16 points lower than XLE’s Alpha and Beta.

Performance

Annual Returns

BSV vs. XLE - Annual Returns

Year BSV XLE
2020 4.67% -32.56%
2019 4.92% 11.87%
2018 1.34% -18.1%
2017 1.2% -1.01%
2016 1.42% 27.95%
2015 0.92% -21.47%
2014 1.32% -8.61%
2013 0.17% 26.16%
2012 1.98% 5.17%
2011 3.04% 2.98%
2010 4.0% 21.7%

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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.

Portfolio Growth

BSV vs. XLE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
XLE $10,000 $9,339 1.28%

A $10,000 investment in BSV would have resulted in a final balance of $12,785. This is a profit of $2,785 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.27%.

With a $10,000 investment in XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.

BSV’s CAGR is 0.99 percentage points higher than that of XLE and as a result, would have yielded $3,446 more on a $10,000 investment. Thus, BSV outperformed XLE by 0.99% annually.


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