The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between BSV and XLI? And which fund is better?
The expense ratio of BSV is 0.07 percentage points lower than XLI’s (0.05% vs. 0.12%). BSV is mostly comprised of AAA bonds while XLI has a high exposure to the industrials sector. Overall, BSV has provided lower returns than XLI over the past ten years.
In this article, we’ll compare BSV vs. XLI. We’ll look at industry exposure and fund composition, as well as at their performance and holdings. Moreover, I’ll also discuss BSV’s and XLI’s portfolio growth, risk metrics, and annual returns and examine how these affect their overall returns.
Summary
| BSV | XLI | |
| Name | Vanguard Short-Term Bond Index Fund ETF Shares | Industrial Select Sector SPDR Fund |
| Category | Short-Term Bond | Industrials |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 67.71B | 19.33B |
| Avg. Return | 2.27% | 14.44% |
| Div. Yield | 1.48% | 1.25% |
| 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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.
BSV’s dividend yield is 0.23% higher than that of XLI (1.48% vs. 1.25%). Also, BSV yielded on average 12.17% less per year over the past decade (2.27% vs. 14.44%). The expense ratio of BSV is 0.07 percentage points lower than XLI’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.
| XLI Holdings | Weight |
| Honeywell International Inc | 4.9% |
| United Parcel Service Inc Class B | 4.84% |
| Union Pacific Corp | 4.7% |
| Boeing Co | 4.24% |
| Raytheon Technologies Corp | 4.16% |
| Caterpillar Inc | 3.84% |
| General Electric Co | 3.8% |
| 3M Co | 3.7% |
| Deere & Co | 3.54% |
| Lockheed Martin Corp | 2.98% |
XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.
Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.
Risk Analysis
| BSV | XLI | |
| Mean Return | 0.16 | 1.14 |
| R-squared | 78.38 | 78.97 |
| Std. Deviation | 1.33 | 17.13 |
| Alpha | 0.21 | 2.38 |
| Beta | 0.38 | 1.08 |
| Sharpe Ratio | 0.98 | 0.76 |
| Treynor Ratio | 3.33 | 11.34 |
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Beta of 0.38 with a Sharpe Ratio of 0.98 and a Alpha of 0.21. Its Mean Return is 0.16 while BSV’s R-squared is 78.38. Furthermore, the fund has a Treynor Ratio of 3.33 and a Standard Deviation of 1.33.
The Industrial Select Sector SPDR Fund (XLI) has a R-squared of 78.97 with a Mean Return of 1.14 and a Treynor Ratio of 11.34. Its Standard Deviation is 17.13 while XLI’s Sharpe Ratio is 0.76. Furthermore, the fund has a Beta of 1.08 and a Alpha of 2.38.
BSV’s Mean Return is 0.98 points lower than that of XLI and its R-squared is 0.59 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than XLI. The Alpha and Beta of BSV are 2.17 points lower and 0.70 points lower than XLI’s Alpha and Beta.
Performance
Annual Returns
| Year | BSV | XLI |
| 2020 | 4.67% | 11.0% |
| 2019 | 4.92% | 29.11% |
| 2018 | 1.34% | -13.1% |
| 2017 | 1.2% | 23.85% |
| 2016 | 1.42% | 19.93% |
| 2015 | 0.92% | -4.27% |
| 2014 | 1.32% | 10.44% |
| 2013 | 0.17% | 40.44% |
| 2012 | 1.98% | 14.86% |
| 2011 | 3.04% | -1.01% |
| 2010 | 4.0% | 27.62% |
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 2013 was the strongest year for XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| BSV | $10,000 | $12,785 | 2.27% |
| XLI | $10,000 | $39,853 | 14.44% |
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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.
BSV’s CAGR is 12.17 percentage points lower than that of XLI and as a result, would have yielded $27,068 less on a $10,000 investment. Thus, BSV performed worse than XLI by 12.17% 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.
