The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between VB and XLY? And which fund is better?
The expense ratio of VB is 0.07 percentage points lower than XLY’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 XLY over the past ten years.
In this article, we’ll compare VB vs. XLY. We’ll look at portfolio growth and annual returns, as well as at their performance and holdings. Moreover, I’ll also discuss VB’s and XLY’s industry exposure, fund composition, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||Consumer Discretionary Select Sector SPDR Fund|
|Category||Small Blend||Consumer Cyclical|
|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 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%.
VB’s dividend yield is 0.51% higher than that of XLY (1.14% vs. 0.63%). Also, VB yielded on average 4.61% less per year over the past decade (14.25% vs. 18.86%). The expense ratio of VB is 0.07 percentage points lower than XLY’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 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%.
VB is 16.28% more exposed to the Technology sector than XLY (16.85% vs 0.57%). 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 4.87% more of the fund’s holdings compared to XLY (10.21% vs. 5.34%).
|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%.
|The Home Depot Inc||8.74%|
|Nike Inc B||4.45%|
|Lowe’s Companies Inc||3.58%|
|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%.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Standard Deviation of 17.82 with a Beta of 1.21 and a Treynor Ratio of 10.15. Its Mean Return is 1.15 while VB’s R-squared is 85.03. Furthermore, the fund has a Alpha of -4.02 and a Sharpe Ratio of 0.74.
The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Treynor Ratio of 16.69 with a Mean Return of 1.47 and a Beta of 1.02. Its Sharpe Ratio is 1.06 while XLY’s R-squared is 80.84. Furthermore, the fund has a Standard Deviation of 15.97 and a Alpha of 6.96.
VB’s Mean Return is 0.32 points lower than that of XLY and its R-squared is 4.19 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than XLY. The Alpha and Beta of VB are 10.98 points lower and 0.19 points higher than XLY’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 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.
|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 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%.
VB’s CAGR is 4.61 percentage points lower than that of XLY and as a result, would have yielded $23,332 less on a $10,000 investment. Thus, VB performed worse than XLY by 4.61% annually.
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