The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VB and XLC? And which fund is better?
The expense ratio of VB is 0.07 percentage points lower than XLC’s (0.05% vs. 0.12%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided lower returns than XLC over the past ten years.
In this article, we’ll compare VB vs. XLC. We’ll look at annual returns and portfolio growth, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss VB’s and XLC’s holdings, performance, and industry exposure and examine how these affect their overall returns.
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Summary
| VB | XLC | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Communication Services Select Sector SPDR Fund |
| Category | Small Blend | Communications |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 137.72B | 14.09B |
| Avg. Return | 14.25% | 29.04% |
| Div. Yield | 1.14% | 0.62% |
| Expense Ratio | 0.05% | 0.12% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
The Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
VB’s dividend yield is 0.52% higher than that of XLC (1.14% vs. 0.62%). Also, VB yielded on average 14.78% less per year over the past decade (14.25% vs. 29.04%). The expense ratio of VB is 0.07 percentage points lower than XLC’s (0.05% vs. 0.12%).
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Fund Composition
Industry Exposure
| VB | XLC | |
| Technology | 16.85% | 0.0% |
| Industrials | 16.11% | 0.0% |
| Energy | 3.67% | 0.0% |
| Communication Services | 2.4% | 100.0% |
| Utilities | 2.19% | 0.0% |
| Healthcare | 14.34% | 0.0% |
| Consumer Defensive | 4.14% | 0.0% |
| Real Estate | 9.56% | 0.0% |
| Financial Services | 13.06% | 0.0% |
| Consumer Cyclical | 13.03% | 0.0% |
| Basic Materials | 4.63% | 0.0% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
The Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VB is 16.85% more exposed to the Technology sector than XLC (16.85% vs 0.0%). VB’s exposure to Industrials and Healthcare stocks is 16.11% higher and 14.34% higher respectively (16.11% vs. 0.0% and 14.34% vs. 0.0%). In total, Communication Services, Energy, and Consumer Defensive also make up 89.79% less of the fund’s holdings compared to XLC (10.21% vs. 100.00%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
Risk Analysis
| VB | XLC | |
| Mean Return | 1.15 | 0 |
| R-squared | 85.03 | 0 |
| Std. Deviation | 17.82 | 0 |
| Alpha | -4.02 | 0 |
| Beta | 1.21 | 0 |
| Sharpe Ratio | 0.74 | 0 |
| Treynor Ratio | 10.15 | 0 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a R-squared of 85.03 with a Standard Deviation of 17.82 and a Beta of 1.21. Its Treynor Ratio is 10.15 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a Mean Return of 1.15 and a Alpha of -4.02.
The Communication Services Select Sector SPDR Fund (XLC) has a Mean Return of 0 with a Beta of 0 and a Sharpe Ratio of 0. Its Alpha is 0 while XLC’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.
VB’s Mean Return is 1.15 points higher than that of XLC and its R-squared is 85.03 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than XLC. The Alpha and Beta of VB are 4.02 points lower and 1.21 points higher than XLC’s Alpha and Beta.
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Performance
Annual Returns
| Year | VB | XLC |
| 2020 | 19.08% | 26.85% |
| 2019 | 27.37% | 31.22% |
| 2018 | -9.3% | 0.0% |
| 2017 | 16.24% | 0.0% |
| 2016 | 18.31% | 0.0% |
| 2015 | -3.65% | 0.0% |
| 2014 | 7.51% | 0.0% |
| 2013 | 37.8% | 0.0% |
| 2012 | 18.22% | 0.0% |
| 2011 | -2.68% | 0.0% |
| 2010 | 27.89% | 0.0% |
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% respectively.
The year 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $15,167 | 14.25% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in VB would have resulted in a final balance of $15,167. This is a profit of $5,167 over 2 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
VB’s CAGR is 14.78 percentage points lower than that of XLC and as a result, would have yielded $1,478 less on a $10,000 investment. Thus, VB performed worse than XLC by 14.78% annually.
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