The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between VIG and XLE? And which fund is better?
The expense ratio of VIG is 0.06 percentage points lower than XLE’s (0.06% vs. 0.12%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than XLE over the past ten years.
In this article, we’ll compare VIG vs. XLE. We’ll look at holdings and risk metrics, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VIG’s and XLE’s performance, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||Energy Select Sector SPDR Fund|
|Category||Large Blend||Equity Energy|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 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%.
VIG’s dividend yield is 2.36% lower than that of XLE (1.56% vs. 3.92%). Also, VIG yielded on average 12.07% more per year over the past decade (13.35% vs. 1.28%). The expense ratio of VIG is 0.06 percentage points lower than XLE’s (0.06% vs. 0.12%).
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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 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%.
VIG is 17.23% more exposed to the Industrials sector than XLE (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 XLE (5.67% vs. 100.00%).
|JPMorgan Chase & Co||3.8%|
|Johnson & Johnson||3.67%|
|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%|
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%.
|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 Dividend Appreciation Index Fund ETF Shares (VIG) has a Standard Deviation of 12.25 with a Treynor Ratio of 14.33 and a Beta of 0.86. Its Alpha is 0.12 while VIG’s R-squared is 92.2. Furthermore, the fund has a Sharpe Ratio of 1.01 and a Mean Return of 1.09.
The Energy Select Sector SPDR Fund (XLE) has a R-squared of 61.84 with a Sharpe Ratio of 0.12 and a Standard Deviation of 27.52. Its Treynor Ratio is -0.4 while XLE’s Alpha is -11.98. Furthermore, the fund has a Mean Return of 0.32 and a Beta of 1.54.
VIG’s Mean Return is 0.77 points higher than that of XLE and its R-squared is 30.36 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than XLE. The Alpha and Beta of VIG are 12.10 points higher and 0.68 points lower than XLE’s Alpha and Beta.
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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 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 VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
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%.
VIG’s CAGR is 12.07 percentage points higher than that of XLE and as a result, would have yielded $28,612 more on a $10,000 investment. Thus, VIG outperformed XLE by 12.07% annually.
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