The SPDR S&P 500 ETF Trust (SPY) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. SPY is a SPDR State Street Global Advisors Large Blend fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between SPY and XLY? And which fund is better?
The expense ratio of SPY is 0.03 percentage points lower than XLY’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 lower returns than XLY over the past ten years.
In this article, we’ll compare SPY vs. XLY. We’ll look at portfolio growth and performance, as well as at their risk metrics and holdings. Moreover, I’ll also discuss SPY’s and XLY’s annual returns, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| SPY | XLY | |
| Name | SPDR S&P 500 ETF Trust | Consumer Discretionary Select Sector SPDR Fund |
| Category | Large Blend | Consumer Cyclical |
| Issuer | SPDR State Street Global Advisors | SPDR State Street Global Advisors |
| AUM | 374.03B | 20.21B |
| Avg. Return | 14.41% | 18.86% |
| Div. Yield | 1.3% | 0.63% |
| 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 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%.
SPY’s dividend yield is 0.67% higher than that of XLY (1.3% vs. 0.63%). Also, SPY yielded on average 4.45% less per year over the past decade (14.41% vs. 18.86%). The expense ratio of SPY is 0.03 percentage points lower than XLY’s (0.09% vs. 0.12%).
Fund CompositionIndustry Exposure
| SPY | XLY | |
| Technology | 24.22% | 0.57% |
| 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% | 5.34% |
| Real Estate | 2.57% | 0.0% |
| Financial Services | 14.23% | 0.0% |
| Consumer Cyclical | 12.0% | 94.1% |
| 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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.
XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.
SPY is 23.65% more exposed to the Technology sector than XLY (24.22% vs 0.57%). SPY’s exposure to Financial Services and Healthcare stocks is 14.23% higher and 13.09% higher respectively (14.23% vs. 0.0% 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 XLY (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%.
| 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
| SPY | XLY | |
| Mean Return | 1.23 | 1.47 |
| R-squared | 100 | 80.84 |
| Std. Deviation | 13.56 | 15.97 |
| Alpha | -0.09 | 6.96 |
| Beta | 1 | 1.02 |
| Sharpe Ratio | 1.04 | 1.06 |
| Treynor Ratio | 14.12 | 16.69 |
The SPDR S&P 500 ETF Trust (SPY) has a Standard Deviation of 13.56 with a Alpha of -0.09 and a Mean Return of 1.23. Its Beta is 1 while SPY’s Treynor Ratio is 14.12. Furthermore, the fund has a Sharpe Ratio of 1.04 and a R-squared of 100.
The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Beta of 1.02 with a Standard Deviation of 15.97 and a Sharpe Ratio of 1.06. Its Treynor Ratio is 16.69 while XLY’s R-squared is 80.84. Furthermore, the fund has a Mean Return of 1.47 and a Alpha of 6.96.
SPY’s Mean Return is 0.24 points lower than that of XLY and its R-squared is 19.16 points higher. With a Standard Deviation of 13.56, SPY is slightly less volatile than XLY. The Alpha and Beta of SPY are 7.05 points lower and 0.02 points lower than XLY’s Alpha and Beta.
Performance
Annual Returns
| Year | SPY | XLY |
| 2020 | 18.25% | 29.66% |
| 2019 | 31.29% | 28.43% |
| 2018 | -4.45% | 1.66% |
| 2017 | 21.69% | 22.77% |
| 2016 | 11.8% | 5.87% |
| 2015 | 1.34% | 9.93% |
| 2014 | 13.53% | 9.49% |
| 2013 | 32.21% | 42.74% |
| 2012 | 15.84% | 23.6% |
| 2011 | 2.06% | 5.98% |
| 2010 | 14.93% | 27.36% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| SPY | $10,000 | $41,712 | 14.41% |
| XLY | $10,000 | $63,066 | 18.86% |
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 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%.
SPY’s CAGR is 4.45 percentage points lower than that of XLY and as a result, would have yielded $21,354 less on a $10,000 investment. Thus, SPY performed worse than XLY by 4.45% annually.
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