VIG vs. XLC: What’s The Difference?

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VIG and XLC? And which fund is better?

The expense ratio of VIG is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%). VIG also has a higher exposure to the industrials sector and a higher standard deviation. Overall, VIG has provided lower returns than XLC over the past ten years.

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

Summary

VIG XLC
Name Vanguard Dividend Appreciation Index Fund ETF Shares Communication Services Select Sector SPDR Fund
Category Large Blend Communications
Issuer Vanguard SPDR State Street Global Advisors
AUM 71.92B 14.09B
Avg. Return 13.35% 29.04%
Div. Yield 1.56% 0.62%
Expense Ratio 0.06% 0.12%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.

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%.

VIG’s dividend yield is 0.94% higher than that of XLC (1.56% vs. 0.62%). Also, VIG yielded on average 15.69% less per year over the past decade (13.35% vs. 29.04%). The expense ratio of VIG is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%).

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Fund Composition

Industry Exposure

VIG vs. XLC - Industry Exposure

VIG XLC
Technology 14.93% 0.0%
Industrials 17.23% 0.0%
Energy 0.0% 0.0%
Communication Services 2.86% 100.0%
Utilities 2.81% 0.0%
Healthcare 15.52% 0.0%
Consumer Defensive 15.32% 0.0%
Real Estate 0.0% 0.0%
Financial Services 17.18% 0.0%
Consumer Cyclical 10.47% 0.0%
Basic Materials 3.67% 0.0%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.

VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.

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%.

VIG is 17.23% more exposed to the Industrials sector than XLC (17.23% vs 0.0%). VIG’s exposure to Financial Services and Healthcare stocks is 17.18% higher and 15.52% higher respectively (17.18% vs. 0.0% and 15.52% vs. 0.0%). In total, Energy, Utilities, and Communication Services also make up 94.33% less of the fund’s holdings compared to XLC (5.67% vs. 100.00%).

Holdings

VIG - Holdings

VIG Holdings Weight
Microsoft Corp 4.19%
JPMorgan Chase & Co 3.8%
Johnson & Johnson 3.67%
Walmart Inc 3.38%
Visa Inc Class A 3.22%
UnitedHealth Group Inc 3.22%
The Home Depot Inc 2.91%
Procter & Gamble Co 2.82%
Comcast Corp Class A 2.21%
Coca-Cola Co 1.98%

VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.

UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.

XLC - Holdings

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%.

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Risk Analysis

VIG XLC
Mean Return 1.09 0
R-squared 92.2 0
Std. Deviation 12.25 0
Alpha 0.12 0
Beta 0.86 0
Sharpe Ratio 1.01 0
Treynor Ratio 14.33 0

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Mean Return of 1.09 with a Alpha of 0.12 and a Treynor Ratio of 14.33. Its R-squared is 92.2 while VIG’s Beta is 0.86. Furthermore, the fund has a Standard Deviation of 12.25 and a Sharpe Ratio of 1.01.

The Communication Services Select Sector SPDR Fund (XLC) has a Sharpe Ratio of 0 with a R-squared of 0 and a Alpha of 0. Its Mean Return is 0 while XLC’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Beta of 0.

VIG’s Mean Return is 1.09 points higher than that of XLC and its R-squared is 92.20 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than XLC. The Alpha and Beta of VIG are 0.12 points higher and 0.86 points higher than XLC’s Alpha and Beta.

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Performance

Annual Returns

VIG vs. XLC - Annual Returns

Year VIG XLC
2020 15.46% 26.85%
2019 29.71% 31.22%
2018 -2.02% 0.0%
2017 22.22% 0.0%
2016 11.84% 0.0%
2015 -1.95% 0.0%
2014 10.06% 0.0%
2013 28.99% 0.0%
2012 11.61% 0.0%
2011 6.21% 0.0%
2010 14.67% 0.0%

VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% 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

VIG vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VIG $10,000 $14,976 13.35%
XLC $10,000 $16,645 29.04%

A $10,000 investment in VIG would have resulted in a final balance of $14,976. This is a profit of $4,976 over 2 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

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%.

VIG’s CAGR is 15.69 percentage points lower than that of XLC and as a result, would have yielded $1,669 less on a $10,000 investment. Thus, VIG performed worse than XLC by 15.69% annually.


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