The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VEU and XLC? And which fund is better?
The expense ratio of VEU is 0.04 percentage points lower than XLC’s (0.08% vs. 0.12%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than XLC over the past ten years.
In this article, we’ll compare VEU vs. XLC. We’ll look at fund composition and performance, as well as at their holdings and industry exposure. Moreover, I’ll also discuss VEU’s and XLC’s annual returns, risk metrics, and portfolio growth and examine how these affect their overall returns.
Summary
| VEU | XLC | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Communication Services Select Sector SPDR Fund |
| Category | Foreign Large Blend | Communications |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 53.64B | 14.09B |
| Avg. Return | 6.64% | 29.04% |
| Div. Yield | 2.31% | 0.62% |
| Expense Ratio | 0.08% | 0.12% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
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%.
VEU’s dividend yield is 1.69% higher than that of XLC (2.31% vs. 0.62%). Also, VEU yielded on average 22.40% less per year over the past decade (6.64% vs. 29.04%). The expense ratio of VEU is 0.04 percentage points lower than XLC’s (0.08% vs. 0.12%).
Fund Composition
Industry Exposure
| VEU | XLC | |
| Technology | 12.94% | 0.0% |
| Industrials | 12.19% | 0.0% |
| Energy | 4.69% | 0.0% |
| Communication Services | 7.44% | 100.0% |
| Utilities | 2.89% | 0.0% |
| Healthcare | 9.34% | 0.0% |
| Consumer Defensive | 8.28% | 0.0% |
| Real Estate | 3.04% | 0.0% |
| Financial Services | 18.46% | 0.0% |
| Consumer Cyclical | 12.57% | 0.0% |
| Basic Materials | 8.17% | 0.0% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
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%.
VEU is 18.46% more exposed to the Financial Services sector than XLC (18.46% vs 0.0%). VEU’s exposure to Technology and Consumer Cyclical stocks is 12.94% higher and 12.57% higher respectively (12.94% vs. 0.0% and 12.57% vs. 0.0%). In total, Real Estate, Energy, and Communication Services also make up 84.83% less of the fund’s holdings compared to XLC (15.17% vs. 100.00%).
Holdings
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
| 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
| VEU | XLC | |
| Mean Return | 0.56 | 0 |
| R-squared | 98.44 | 0 |
| Std. Deviation | 15.08 | 0 |
| Alpha | 0.28 | 0 |
| Beta | 0.99 | 0 |
| Sharpe Ratio | 0.4 | 0 |
| Treynor Ratio | 5.12 | 0 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Mean Return of 0.56 with a Beta of 0.99 and a Alpha of 0.28. Its Sharpe Ratio is 0.4 while VEU’s R-squared is 98.44. Furthermore, the fund has a Treynor Ratio of 5.12 and a Standard Deviation of 15.08.
The Communication Services Select Sector SPDR Fund (XLC) has a R-squared of 0 with a Standard Deviation of 0 and a Treynor Ratio of 0. Its Alpha is 0 while XLC’s Mean Return is 0. Furthermore, the fund has a Beta of 0 and a Sharpe Ratio of 0.
VEU’s Mean Return is 0.56 points higher than that of XLC and its R-squared is 98.44 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than XLC. The Alpha and Beta of VEU are 0.28 points higher and 0.99 points higher than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | VEU | XLC |
| 2020 | 11.39% | 26.85% |
| 2019 | 21.63% | 31.22% |
| 2018 | -13.97% | 0.0% |
| 2017 | 27.27% | 0.0% |
| 2016 | 4.77% | 0.0% |
| 2015 | -4.67% | 0.0% |
| 2014 | -4.05% | 0.0% |
| 2013 | 14.5% | 0.0% |
| 2012 | 18.55% | 0.0% |
| 2011 | -14.25% | 0.0% |
| 2010 | 11.85% | 0.0% |
VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% 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 |
| VEU | $10,000 | $13,548 | 6.64% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in VEU would have resulted in a final balance of $13,548. This is a profit of $3,548 over 2 years and amounts to a compound annual growth rate (CAGR) of 6.64%.
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%.
VEU’s CAGR is 22.40 percentage points lower than that of XLC and as a result, would have yielded $3,097 less on a $10,000 investment. Thus, VEU performed worse than XLC by 22.40% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
