The SPDR S&P 500 ETF Trust (SPY) and the Financial Select Sector SPDR Fund (XLF) are both among the Top 100 ETFs. SPY is a SPDR State Street Global Advisors Large Blend fund and XLF is a SPDR State Street Global Advisors Financial fund. So, what’s the difference between SPY and XLF? And which fund is better?
The expense ratio of SPY is 0.03 percentage points lower than XLF’s (0.09% vs. 0.12%). SPY also has a higher exposure to the technology sector and a lower standard deviation. Overall, SPY has provided higher returns than XLF over the past ten years.
In this article, we’ll compare SPY vs. XLF. We’ll look at fund composition and holdings, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss SPY’s and XLF’s performance, annual returns, and risk metrics and examine how these affect their overall returns.
You can take a look at SPY vs. TQQQ for another great set of funds to own.
Summary
| SPY | XLF | |
| Name | SPDR S&P 500 ETF Trust | Financial Select Sector SPDR Fund |
| Category | Large Blend | Financial |
| Issuer | SPDR State Street Global Advisors | SPDR State Street Global Advisors |
| AUM | 374.03B | 40.81B |
| Avg. Return | 14.41% | 12.17% |
| Div. Yield | 1.3% | 1.57% |
| Expense Ratio | 0.09% | 0.12% |
The SPDR S&P 500 ETF Trust (SPY) is a Large Blend fund that is issued by SPDR State Street Global Advisors. It currently has 374.03B total assets under management and has yielded an average annual return of 14.41% over the past 10 years. The fund has a dividend yield of 1.3% with an expense ratio of 0.09%.
The Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.
Another great SPY comparison is SPY vs. PFF.
SPY’s dividend yield is 0.27% lower than that of XLF (1.3% vs. 1.57%). Also, SPY yielded on average 2.24% more per year over the past decade (14.41% vs. 12.17%). The expense ratio of SPY is 0.03 percentage points lower than XLF’s (0.09% vs. 0.12%).
Fund Composition
Industry Exposure
| SPY | XLF | |
| Technology | 24.22% | 0.0% |
| Industrials | 8.86% | 0.0% |
| Energy | 2.86% | 0.0% |
| Communication Services | 11.14% | 0.0% |
| Utilities | 2.45% | 0.0% |
| Healthcare | 13.09% | 0.0% |
| Consumer Defensive | 6.32% | 0.0% |
| Real Estate | 2.57% | 0.0% |
| Financial Services | 14.23% | 100.0% |
| Consumer Cyclical | 12.0% | 0.0% |
| Basic Materials | 2.27% | 0.0% |
The SPDR S&P 500 ETF Trust (SPY) has the most exposure to the Technology sector at 24.22%. This is followed by Financial Services and Healthcare at 14.23% and 13.09% respectively. Utilities (2.45%), Real Estate (2.57%), and Energy (2.86%) only make up 7.88% of the fund’s total assets.
SPY’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.0%, and 13.09%.
The Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
I have a related article on SPY vs. MUB that has a lot of break downs.
XLF’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
SPY is 24.22% more exposed to the Technology sector than XLF (24.22% vs 0.0%). SPY’s exposure to Financial Services and Healthcare stocks is 85.77% lower and 13.09% higher respectively (14.23% vs. 100.0% and 13.09% vs. 0.0%). In total, Utilities, Real Estate, and Energy also make up 7.88% more of the fund’s holdings compared to XLF (7.88% vs. 0.00%).
Holdings
| SPY Holdings | Weight |
| Apple Inc | 5.9% |
| Microsoft Corp | 5.6% |
| Amazon.com Inc | 4.05% |
| Facebook Inc A | 2.29% |
| Alphabet Inc A | 2.02% |
| Alphabet Inc Class C | 1.96% |
| Berkshire Hathaway Inc Class B | 1.45% |
| Tesla Inc | 1.44% |
| NVIDIA Corp | 1.37% |
| JPMorgan Chase & Co | 1.29% |
SPY’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.9%, 5.6%, 4.05%, 2.29%, and 2.02%.
Alphabet Inc Class C (1.96%), Berkshire Hathaway Inc Class B (1.45%), and Tesla Inc (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SPY’s holdings at 1.37% and 1.29%.
| XLF Holdings | Weight |
| Berkshire Hathaway Inc Class B | 12.83% |
| JPMorgan Chase & Co | 11.47% |
| Bank of America Corp | 7.57% |
| Wells Fargo & Co | 4.56% |
| Citigroup Inc | 3.56% |
| Morgan Stanley | 3.32% |
| Goldman Sachs Group Inc | 3.15% |
| BlackRock Inc | 3.02% |
| Charles Schwab Corp | 2.66% |
| American Express Co | 2.62% |
XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.
Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.
Risk Analysis
| SPY | XLF | |
| Mean Return | 1.23 | 1.21 |
| R-squared | 100 | 73.26 |
| Std. Deviation | 13.56 | 18.86 |
| Alpha | -0.09 | 2.63 |
| Beta | 1 | 1.15 |
| Sharpe Ratio | 1.04 | 0.74 |
| Treynor Ratio | 14.12 | 11.25 |
The SPDR S&P 500 ETF Trust (SPY) has a R-squared of 100 with a Mean Return of 1.23 and a Treynor Ratio of 14.12. Its Standard Deviation is 13.56 while SPY’s Alpha is -0.09. Furthermore, the fund has a Beta of 1 and a Sharpe Ratio of 1.04.
The Financial Select Sector SPDR Fund (XLF) has a Beta of 1.15 with a Alpha of 2.63 and a Mean Return of 1.21. Its Standard Deviation is 18.86 while XLF’s Sharpe Ratio is 0.74. Furthermore, the fund has a R-squared of 73.26 and a Treynor Ratio of 11.25.
If you still want to see how SPY stacks up to other competition check out SPY v. ARKK.
SPY’s Mean Return is 0.02 points higher than that of XLF and its R-squared is 26.74 points higher. With a Standard Deviation of 13.56, SPY is slightly less volatile than XLF. The Alpha and Beta of SPY are 2.72 points lower and 0.15 points lower than XLF’s Alpha and Beta.
Performance
Annual Returns
| Year | SPY | XLF |
| 2020 | 18.25% | -1.68% |
| 2019 | 31.29% | 31.88% |
| 2018 | -4.45% | -13.09% |
| 2017 | 21.69% | 22.03% |
| 2016 | 11.8% | 22.55% |
| 2015 | 1.34% | -1.6% |
| 2014 | 13.53% | 15.02% |
| 2013 | 32.21% | 35.37% |
| 2012 | 15.84% | 28.53% |
| 2011 | 2.06% | -17.16% |
| 2010 | 14.93% | 11.97% |
SPY had its best year in 2013 with an annual return of 32.21%. SPY’s worst year over the past decade yielded -4.45% and occurred in 2018. In most years the SPDR S&P 500 ETF Trust provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.53%, 14.93%, and 15.84% respectively.
The year 2013 was the strongest year for XLF, returning 35.37% on an annual basis. The poorest year for XLF in the last ten years was 2011, with a yield of -17.16%. Most years the Financial Select Sector SPDR Fund has given investors modest returns, such as in 2010, 2014, and 2017, when gains were 11.97%, 15.02%, and 22.03% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SPY | $10,000 | $41,712 | 14.41% |
| XLF | $10,000 | $30,782 | 12.17% |
A $10,000 investment in SPY would have resulted in a final balance of $41,712. This is a profit of $31,712 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.41%.
With a $10,000 investment in XLF, the end total would have been $30,782. This equates to a $20,782 profit over 11 years and a compound annual growth rate (CAGR) of 12.17%.
SPY’s CAGR is 2.24 percentage points higher than that of XLF and as a result, would have yielded $10,930 more on a $10,000 investment. Thus, SPY outperformed XLF by 2.24% annually.
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