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VGT vs. XLE: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between VGT and XLE? And which fund is better?

The expense ratio of VGT is 0.02 percentage points lower than XLE’s (0.1% vs. 0.12%). VGT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VGT has provided higher returns than XLE over the past ten years.

In this article, we’ll compare VGT vs. XLE. We’ll look at fund composition and industry exposure, as well as at their portfolio growth and performance. Moreover, I’ll also discuss VGT’s and XLE’s risk metrics, holdings, and annual returns and examine how these affect their overall returns.

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Summary

VGTXLE
NameVanguard Information Technology Index Fund ETF SharesEnergy Select Sector SPDR Fund
CategoryTechnologyEquity Energy
IssuerVanguardSPDR State Street Global Advisors
AUM54.13B25.55B
Avg. Return20.84%1.28%
Div. Yield0.66%3.92%
Expense Ratio0.1%0.12%

The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.

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%.

VGT’s dividend yield is 3.26% lower than that of XLE (0.66% vs. 3.92%). Also, VGT yielded on average 19.56% more per year over the past decade (20.84% vs. 1.28%). The expense ratio of VGT is 0.02 percentage points lower than XLE’s (0.1% vs. 0.12%).

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Fund Composition

Industry Exposure

VGT vs. XLE - Industry Exposure

VGTXLE
Technology88.89%0.0%
Industrials1.67%0.0%
Energy0.0%100.0%
Communication Services0.61%0.0%
Utilities0.0%0.0%
Healthcare0.0%0.0%
Consumer Defensive0.0%0.0%
Real Estate0.0%0.0%
Financial Services8.83%0.0%
Consumer Cyclical0.0%0.0%
Basic Materials0.0%0.0%

The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.

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%.

VGT is 88.89% more exposed to the Technology sector than XLE (88.89% vs 0.0%). VGT’s exposure to Financial Services and Industrials stocks is 8.83% higher and 1.67% higher respectively (8.83% vs. 0.0% and 1.67% vs. 0.0%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 0.00% less of the fund’s holdings compared to XLE (0.00% vs. 0.00%).

Holdings

VGT - Holdings

VGT HoldingsWeight
Apple Inc19.58%
Microsoft Corp16.53%
NVIDIA Corp4.22%
Visa Inc Class A3.16%
PayPal Holdings Inc2.76%
Mastercard Inc Class A2.76%
Adobe Inc2.39%
Intel Corp1.94%
Salesforce.com Inc1.91%
Cisco Systems Inc1.9%

VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.

Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.

XLE - Holdings

XLE HoldingsWeight
Exxon Mobil Corp23.7%
Chevron Corp20.03%
ConocoPhillips4.64%
EOG Resources Inc4.46%
Schlumberger Ltd4.43%
Marathon Petroleum Corp4.17%
Pioneer Natural Resources Co4.08%
Phillips 664.07%
Kinder Morgan Inc Class P3.85%
Williams Companies Inc3.5%

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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Risk Analysis

VGTXLE
Mean Return1.760.32
R-squared74.8461.84
Std. Deviation16.6127.52
Alpha10.41-11.98
Beta1.021.54
Sharpe Ratio1.230.12
Treynor Ratio20.55-0.4

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Beta of 1.02 with a Treynor Ratio of 20.55 and a Standard Deviation of 16.61. Its Sharpe Ratio is 1.23 while VGT’s R-squared is 74.84. Furthermore, the fund has a Alpha of 10.41 and a Mean Return of 1.76.

The Energy Select Sector SPDR Fund (XLE) has a Beta of 1.54 with a Mean Return of 0.32 and a Alpha of -11.98. Its R-squared is 61.84 while XLE’s Sharpe Ratio is 0.12. Furthermore, the fund has a Treynor Ratio of -0.4 and a Standard Deviation of 27.52.

VGT’s Mean Return is 1.44 points higher than that of XLE and its R-squared is 13.00 points higher. With a Standard Deviation of 16.61, VGT is slightly less volatile than XLE. The Alpha and Beta of VGT are 22.39 points higher and 0.52 points lower than XLE’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. XLE - Annual Returns

YearVGTXLE
202045.94%-32.56%
201948.68%11.87%
20182.52%-18.1%
201737.07%-1.01%
201613.73%27.95%
20155.02%-21.47%
201418.01%-8.61%
201330.91%26.16%
201214.05%5.17%
20110.52%2.98%
201012.74%21.7%

VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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.

Portfolio Growth

VGT vs. XLE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$72,71820.84%
XLE$10,000$9,3391.28%

A $10,000 investment in VGT would have resulted in a final balance of $72,718. This is a profit of $62,718 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

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%.

VGT’s CAGR is 19.56 percentage points higher than that of XLE and as a result, would have yielded $63,379 more on a $10,000 investment. Thus, VGT outperformed XLE by 19.56% annually.


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