BSV vs. XLY: What’s The Difference?

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

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

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

Summary

BSV XLY
Name Vanguard Short-Term Bond Index Fund ETF Shares Consumer Discretionary Select Sector SPDR Fund
Category Short-Term Bond Consumer Cyclical
Issuer Vanguard SPDR State Street Global Advisors
AUM 67.71B 20.21B
Avg. Return 2.27% 18.86%
Div. Yield 1.48% 0.63%
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 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%.

BSV’s dividend yield is 0.85% higher than that of XLY (1.48% vs. 0.63%). Also, BSV yielded on average 16.59% less per year over the past decade (2.27% vs. 18.86%). The expense ratio of BSV is 0.07 percentage points lower than XLY’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.

XLY - Holdings

XLY Holdings Weight
Amazon.com Inc 22.9%
Tesla Inc 13.5%
The Home Depot Inc 8.74%
McDonald’s Corp 4.5%
Nike Inc B 4.45%
Lowe’s Companies Inc 3.58%
Starbucks Corp 3.44%
Target Corp 3.12%
Booking Holdings Inc 2.35%
TJX Companies Inc 2.12%

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%.

Risk Analysis

BSV XLY
Mean Return 0.16 1.47
R-squared 78.38 80.84
Std. Deviation 1.33 15.97
Alpha 0.21 6.96
Beta 0.38 1.02
Sharpe Ratio 0.98 1.06
Treynor Ratio 3.33 16.69

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

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Treynor Ratio of 16.69 with a Sharpe Ratio of 1.06 and a Alpha of 6.96. Its Standard Deviation is 15.97 while XLY’s Mean Return is 1.47. Furthermore, the fund has a Beta of 1.02 and a R-squared of 80.84.

BSV’s Mean Return is 1.31 points lower than that of XLY and its R-squared is 2.46 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than XLY. The Alpha and Beta of BSV are 6.75 points lower and 0.64 points lower than XLY’s Alpha and Beta.

Performance

Annual Returns

BSV vs. XLY - Annual Returns

Year BSV XLY
2020 4.67% 29.66%
2019 4.92% 28.43%
2018 1.34% 1.66%
2017 1.2% 22.77%
2016 1.42% 5.87%
2015 0.92% 9.93%
2014 1.32% 9.49%
2013 0.17% 42.74%
2012 1.98% 23.6%
2011 3.04% 5.98%
2010 4.0% 27.36%

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 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

BSV vs. XLY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
XLY $10,000 $63,066 18.86%

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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.

BSV’s CAGR is 16.59 percentage points lower than that of XLY and as a result, would have yielded $50,281 less on a $10,000 investment. Thus, BSV performed worse than XLY by 16.59% annually.


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