The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between VB and XLE? And which fund is better?
The expense ratio of VB is 0.07 percentage points lower than XLE’s (0.05% vs. 0.12%). VB also has a higher exposure to the technology sector and a lower standard deviation. Overall, VB has provided higher returns than XLE over the past ten years.
In this article, we’ll compare VB vs. XLE. We’ll look at performance and fund composition, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss VB’s and XLE’s annual returns, holdings, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||Energy Select Sector SPDR Fund|
|Category||Small Blend||Equity Energy|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.
VB’s dividend yield is 2.78% lower than that of XLE (1.14% vs. 3.92%). Also, VB yielded on average 12.97% more per year over the past decade (14.25% vs. 1.28%). The expense ratio of VB is 0.07 percentage points lower than XLE’s (0.05% vs. 0.12%).
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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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.
XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (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 XLE (10.21% vs. 100.00%).
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
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%.
|Exxon Mobil Corp||23.7%|
|EOG Resources Inc||4.46%|
|Marathon Petroleum Corp||4.17%|
|Pioneer Natural Resources Co||4.08%|
|Kinder Morgan Inc Class P||3.85%|
|Williams Companies Inc||3.5%|
XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.
Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a R-squared of 85.03 with a Sharpe Ratio of 0.74 and a Alpha of -4.02. Its Treynor Ratio is 10.15 while VB’s Beta is 1.21. Furthermore, the fund has a Mean Return of 1.15 and a Standard Deviation of 17.82.
The Energy Select Sector SPDR Fund (XLE) has a Mean Return of 0.32 with a Sharpe Ratio of 0.12 and a Treynor Ratio of -0.4. Its R-squared is 61.84 while XLE’s Standard Deviation is 27.52. Furthermore, the fund has a Alpha of -11.98 and a Beta of 1.54.
VB’s Mean Return is 0.83 points higher than that of XLE and its R-squared is 23.19 points higher. With a Standard Deviation of 17.82, VB is slightly less volatile than XLE. The Alpha and Beta of VB are 7.96 points higher and 0.33 points lower than XLE’s Alpha and Beta.
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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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.
VB’s CAGR is 12.97 percentage points higher than that of XLE and as a result, would have yielded $30,395 more on a $10,000 investment. Thus, VB outperformed XLE by 12.97% annually.
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