The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between BSV and XLV? And which fund is better?
The expense ratio of BSV is 0.07 percentage points lower than XLV’s (0.05% vs. 0.12%). BSV is mostly comprised of AAA bonds while XLV has a high exposure to the healthcare sector. Overall, BSV has provided lower returns than XLV over the past ten years.
In this article, we’ll compare BSV vs. XLV. We’ll look at risk metrics and holdings, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss BSV’s and XLV’s performance, annual returns, and industry exposure and examine how these affect their overall returns.
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|Name||Vanguard Short-Term Bond Index Fund ETF Shares||Health Care Select Sector SPDR Fund|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.
BSV’s dividend yield is 0.08% higher than that of XLV (1.48% vs. 1.4%). Also, BSV yielded on average 12.75% less per year over the past decade (2.27% vs. 15.02%). The expense ratio of BSV is 0.07 percentage points lower than XLV’s (0.05% vs. 0.12%).
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|BSV Bond Sectors||Weight|
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.
|Johnson & Johnson||9.19%|
|UnitedHealth Group Inc||8.01%|
|Thermo Fisher Scientific Inc||4.2%|
|Merck & Co Inc||4.17%|
|Eli Lilly and Co||3.87%|
XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.
Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.
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 Mean Return of 0.16. Its Treynor Ratio is 3.33 while BSV’s Standard Deviation is 1.33. Furthermore, the fund has a Alpha of 0.21 and a R-squared of 78.38.
The Health Care Select Sector SPDR Fund (XLV) has a Alpha of 7.75 with a Beta of 0.7 and a Sharpe Ratio of 1.13. Its Mean Return is 1.27 while XLV’s Treynor Ratio is 21.1. Furthermore, the fund has a Standard Deviation of 12.94 and a R-squared of 58.19.
BSV’s Mean Return is 1.11 points lower than that of XLV and its R-squared is 20.19 points higher. With a Standard Deviation of 1.33, BSV is slightly less volatile than XLV. The Alpha and Beta of BSV are 7.54 points lower and 0.32 points lower than XLV’s Alpha and Beta.
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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 XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 XLV, the end total would have been $44,147. This equates to a $34,147 profit over 11 years and a compound annual growth rate (CAGR) of 15.02%.
BSV’s CAGR is 12.75 percentage points lower than that of XLV and as a result, would have yielded $31,362 less on a $10,000 investment. Thus, BSV performed worse than XLV by 12.75% annually.
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