The iShares MSCI USA Value Factor ETF (VLUE) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VLUE is a iShares Large Value fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VLUE and XLC? And which fund is better?
The expense ratio of VLUE is 0.03 percentage points higher than XLC’s (0.15% vs. 0.12%). VLUE also has a higher exposure to the technology sector and a lower standard deviation. Overall, VLUE has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare VLUE vs. XLC. We’ll look at industry exposure and portfolio growth, as well as at their fund composition and holdings. Moreover, I’ll also discuss VLUE’s and XLC’s risk metrics, performance, and annual returns and examine how these affect their overall returns.
Summary
| VLUE | XLC | |
| Name | iShares MSCI USA Value Factor ETF | Communication Services Select Sector SPDR Fund |
| Category | Large Value | Communications |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 15.95B | 14.09B |
| Avg. Return | 8.91% | 29.04% |
| Div. Yield | 1.89% | 0.62% |
| Expense Ratio | 0.15% | 0.12% |
The iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
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%.
VLUE’s dividend yield is 1.27% higher than that of XLC (1.89% vs. 0.62%). Also, VLUE yielded on average 20.12% less per year over the past decade (8.91% vs. 29.04%). The expense ratio of VLUE is 0.03 percentage points higher than XLC’s (0.15% vs. 0.12%).
Fund Composition
Industry Exposure
| VLUE | XLC | |
| Technology | 26.89% | 0.0% |
| Industrials | 9.14% | 0.0% |
| Energy | 2.42% | 0.0% |
| Communication Services | 10.39% | 100.0% |
| Utilities | 2.68% | 0.0% |
| Healthcare | 14.31% | 0.0% |
| Consumer Defensive | 7.22% | 0.0% |
| Real Estate | 3.19% | 0.0% |
| Financial Services | 10.96% | 0.0% |
| Consumer Cyclical | 10.66% | 0.0% |
| Basic Materials | 2.14% | 0.0% |
The iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
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%.
VLUE is 26.89% more exposed to the Technology sector than XLC (26.89% vs 0.0%). VLUE’s exposure to Healthcare and Financial Services stocks is 14.31% higher and 10.96% higher respectively (14.31% vs. 0.0% and 10.96% vs. 0.0%). In total, Energy, Utilities, and Real Estate also make up 8.29% more of the fund’s holdings compared to XLC (8.29% vs. 0.00%).
Holdings
| VLUE Holdings | Weight |
| AT&T Inc | 7.13% |
| Intel Corp | 6.14% |
| General Motors Co | 3.19% |
| Micron Technology Inc | 3.14% |
| Cisco Systems Inc | 3.05% |
| International Business Machines Corp | 2.76% |
| Target Corp | 2.38% |
| Citigroup Inc | 2.32% |
| Ford Motor Co | 2.23% |
| Pfizer Inc | 2.17% |
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
| 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
| VLUE | XLC | |
| Mean Return | 0 | 0 |
| R-squared | 0 | 0 |
| Std. Deviation | 0 | 0 |
| Alpha | 0 | 0 |
| Beta | 0 | 0 |
| Sharpe Ratio | 0 | 0 |
| Treynor Ratio | 0 | 0 |
The iShares MSCI USA Value Factor ETF (VLUE) has a Beta of 0 with a R-squared of 0 and a Alpha of 0. Its Standard Deviation is 0 while VLUE’s Mean Return is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.
The Communication Services Select Sector SPDR Fund (XLC) has a Alpha of 0 with a Sharpe Ratio of 0 and a Standard Deviation of 0. Its Beta is 0 while XLC’s Treynor Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a R-squared of 0.
VLUE’s Mean Return is 0.00 points lower than that of XLC and its R-squared is 0.00 points lower. With a Standard Deviation of 0, VLUE is slightly less volatile than XLC. The Alpha and Beta of VLUE are 0.00 points lower and 0.00 points lower than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | VLUE | XLC |
| 2020 | -0.32% | 26.85% |
| 2019 | 27.47% | 31.22% |
| 2018 | -11.18% | 0.0% |
| 2017 | 21.97% | 0.0% |
| 2016 | 15.68% | 0.0% |
| 2015 | -3.54% | 0.0% |
| 2014 | 12.29% | 0.0% |
| 2013 | 0.0% | 0.0% |
| 2012 | 0.0% | 0.0% |
| 2011 | 0.0% | 0.0% |
| 2010 | 0.0% | 0.0% |
VLUE had its best year in 2019 with an annual return of 27.47%. VLUE’s worst year over the past decade yielded -11.18% and occurred in 2018. In most years the iShares MSCI USA Value Factor ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% 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 |
| VLUE | $10,000 | $12,706 | 8.91% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in VLUE would have resulted in a final balance of $12,706. This is a profit of $2,706 over 2 years and amounts to a compound annual growth rate (CAGR) of 8.91%.
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%.
VLUE’s CAGR is 20.12 percentage points lower than that of XLC and as a result, would have yielded $3,939 less on a $10,000 investment. Thus, VLUE performed worse than XLC by 20.12% annually.
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