The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between VO and XLE? And which fund is better?
The expense ratio of VO is 0.08 percentage points lower than XLE’s (0.04% vs. 0.12%). VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided higher returns than XLE over the past ten years.
In this article, we’ll compare VO vs. XLE. We’ll look at performance and industry exposure, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VO’s and XLE’s portfolio growth, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| VO | XLE | |
| Name | Vanguard Mid-Cap Index Fund ETF Shares | Energy Select Sector SPDR Fund |
| Category | Mid-Cap Blend | Equity Energy |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 154.08B | 25.55B |
| Avg. Return | 14.34% | 1.28% |
| Div. Yield | 1.23% | 3.92% |
| Expense Ratio | 0.04% | 0.12% |
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
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%.
VO’s dividend yield is 2.69% lower than that of XLE (1.23% vs. 3.92%). Also, VO yielded on average 13.06% more per year over the past decade (14.34% vs. 1.28%). The expense ratio of VO is 0.08 percentage points lower than XLE’s (0.04% vs. 0.12%).
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Fund Composition
Industry Exposure
| VO | XLE | |
| Technology | 22.01% | 0.0% |
| Industrials | 11.92% | 0.0% |
| Energy | 3.82% | 100.0% |
| Communication Services | 5.61% | 0.0% |
| Utilities | 5.12% | 0.0% |
| Healthcare | 13.03% | 0.0% |
| Consumer Defensive | 3.25% | 0.0% |
| Real Estate | 8.67% | 0.0% |
| Financial Services | 11.08% | 0.0% |
| Consumer Cyclical | 12.12% | 0.0% |
| Basic Materials | 3.36% | 0.0% |
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
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%.
VO is 22.01% more exposed to the Technology sector than XLE (22.01% vs 0.0%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 13.03% higher and 12.12% higher respectively (13.03% vs. 0.0% and 12.12% vs. 0.0%). In total, Basic Materials, Energy, and Utilities also make up 87.70% less of the fund’s holdings compared to XLE (12.30% vs. 100.00%).
Holdings
| VO Holdings | Weight |
| IDEXX Laboratories Inc | 0.78% |
| DocuSign Inc | 0.75% |
| Marvell Technology Inc | 0.68% |
| IQVIA Holdings Inc | 0.68% |
| Chipotle Mexican Grill Inc | 0.63% |
| Veeva Systems Inc Class A | 0.62% |
| Digital Realty Trust Inc | 0.62% |
| Centene Corp | 0.62% |
| Aptiv PLC | 0.62% |
| Carrier Global Corp Ordinary Shares | 0.61% |
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
| XLE Holdings | Weight |
| Exxon Mobil Corp | 23.7% |
| Chevron Corp | 20.03% |
| ConocoPhillips | 4.64% |
| EOG Resources Inc | 4.46% |
| Schlumberger Ltd | 4.43% |
| Marathon Petroleum Corp | 4.17% |
| Pioneer Natural Resources Co | 4.08% |
| Phillips 66 | 4.07% |
| 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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Risk Analysis
| VO | XLE | |
| Mean Return | 1.14 | 0.32 |
| R-squared | 92.22 | 61.84 |
| Std. Deviation | 15.65 | 27.52 |
| Alpha | -2.71 | -11.98 |
| Beta | 1.11 | 1.54 |
| Sharpe Ratio | 0.83 | 0.12 |
| Treynor Ratio | 11.32 | -0.4 |
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Beta of 1.11 with a Alpha of -2.71 and a Standard Deviation of 15.65. Its Sharpe Ratio is 0.83 while VO’s R-squared is 92.22. Furthermore, the fund has a Mean Return of 1.14 and a Treynor Ratio of 11.32.
The Energy Select Sector SPDR Fund (XLE) has a Sharpe Ratio of 0.12 with a Mean Return of 0.32 and a Alpha of -11.98. Its Beta is 1.54 while XLE’s Treynor Ratio is -0.4. Furthermore, the fund has a Standard Deviation of 27.52 and a R-squared of 61.84.
VO’s Mean Return is 0.82 points higher than that of XLE and its R-squared is 30.38 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than XLE. The Alpha and Beta of VO are 9.27 points higher and 0.43 points lower than XLE’s Alpha and Beta.
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Performance
Annual Returns
| Year | VO | XLE |
| 2020 | 18.22% | -32.56% |
| 2019 | 31.04% | 11.87% |
| 2018 | -9.21% | -18.1% |
| 2017 | 19.25% | -1.01% |
| 2016 | 11.23% | 27.95% |
| 2015 | -1.34% | -21.47% |
| 2014 | 13.76% | -8.61% |
| 2013 | 35.15% | 26.16% |
| 2012 | 15.98% | 5.17% |
| 2011 | -1.96% | 2.98% |
| 2010 | 25.57% | 21.7% |
VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VO | $10,000 | $40,404 | 14.34% |
| XLE | $10,000 | $9,339 | 1.28% |
A $10,000 investment in VO would have resulted in a final balance of $40,404. This is a profit of $30,404 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
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%.
VO’s CAGR is 13.06 percentage points higher than that of XLE and as a result, would have yielded $31,065 more on a $10,000 investment. Thus, VO outperformed XLE by 13.06% annually.
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