The Vanguard S&P 500 ETF (VOO) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VOO and XLC? And which fund is better?
The expense ratio of VOO is 0.09 percentage points lower than XLC’s (0.03% vs. 0.12%). VOO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VOO has provided lower returns than XLC over the past ten years.
In this article, we’ll compare VOO vs. XLC. We’ll look at industry exposure and performance, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss VOO’s and XLC’s annual returns, fund composition, and holdings and examine how these affect their overall returns.
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Summary
| VOO | XLC | |
| Name | Vanguard S&P 500 ETF | Communication Services Select Sector SPDR Fund |
| Category | Large Blend | Communications |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 753.41B | 14.09B |
| Avg. Return | 14.45% | 29.04% |
| Div. Yield | 1.34% | 0.62% |
| Expense Ratio | 0.03% | 0.12% |
The Vanguard S&P 500 ETF (VOO) is a Large Blend fund that is issued by Vanguard. It currently has 753.41B total assets under management and has yielded an average annual return of 14.45% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.03%.
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%.
VOO’s dividend yield is 0.72% higher than that of XLC (1.34% vs. 0.62%). Also, VOO yielded on average 14.59% less per year over the past decade (14.45% vs. 29.04%). The expense ratio of VOO is 0.09 percentage points lower than XLC’s (0.03% vs. 0.12%).
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Fund Composition
Industry Exposure
| VOO | XLC | |
| Technology | 24.24% | 0.0% |
| Industrials | 8.86% | 0.0% |
| Energy | 2.84% | 0.0% |
| Communication Services | 11.14% | 100.0% |
| Utilities | 2.43% | 0.0% |
| Healthcare | 13.1% | 0.0% |
| Consumer Defensive | 6.32% | 0.0% |
| Real Estate | 2.58% | 0.0% |
| Financial Services | 14.2% | 0.0% |
| Consumer Cyclical | 12.01% | 0.0% |
| Basic Materials | 2.27% | 0.0% |
The Vanguard S&P 500 ETF (VOO) has the most exposure to the Technology sector at 24.24%. This is followed by Financial Services and Healthcare at 14.2% and 13.1% respectively. Utilities (2.43%), Real Estate (2.58%), and Energy (2.84%) only make up 7.85% of the fund’s total assets.
VOO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.01%, and 13.1%.
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%.
VOO is 24.24% more exposed to the Technology sector than XLC (24.24% vs 0.0%). VOO’s exposure to Financial Services and Healthcare stocks is 14.20% higher and 13.10% higher respectively (14.2% vs. 0.0% and 13.1% vs. 0.0%). In total, Utilities, Real Estate, and Energy also make up 7.85% more of the fund’s holdings compared to XLC (7.85% vs. 0.00%).
Holdings
| VOO Holdings | Weight |
| Apple Inc | 5.92% |
| Microsoft Corp | 5.62% |
| Amazon.com Inc | 4.06% |
| Facebook Inc Class A | 2.29% |
| Alphabet Inc Class A | 2.02% |
| Alphabet Inc Class C | 1.97% |
| Tesla Inc | 1.44% |
| Berkshire Hathaway Inc Class B | 1.44% |
| NVIDIA Corp | 1.37% |
| JPMorgan Chase & Co | 1.3% |
VOO’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.92%, 5.62%, 4.06%, 2.29%, and 2.02%.
Alphabet Inc Class C (1.97%), Tesla Inc (1.44%), and Berkshire Hathaway Inc Class B (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VOO’s holdings at 1.37% and 1.3%.
| 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%.
Performance
Annual Returns
| Year | VOO | XLC |
| 2020 | 18.35% | 26.85% |
| 2019 | 31.46% | 31.22% |
| 2018 | -4.42% | 0.0% |
| 2017 | 21.78% | 0.0% |
| 2016 | 11.93% | 0.0% |
| 2015 | 1.35% | 0.0% |
| 2014 | 13.63% | 0.0% |
| 2013 | 32.33% | 0.0% |
| 2012 | 15.98% | 0.0% |
| 2011 | 2.09% | 0.0% |
| 2010 | 0.0% | 0.0% |
VOO had its best year in 2013 with an annual return of 32.33%. VOO’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the Vanguard S&P 500 ETF provided moderate returns such as in 2016, 2014, and 2012 where annual returns amounted to 11.93%, 13.63%, and 15.98% 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 |
| VOO | $10,000 | $15,558 | 14.45% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in VOO would have resulted in a final balance of $15,558. This is a profit of $5,558 over 2 years and amounts to a compound annual growth rate (CAGR) of 14.45%.
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%.
VOO’s CAGR is 14.59 percentage points lower than that of XLC and as a result, would have yielded $1,087 less on a $10,000 investment. Thus, VOO performed worse than XLC by 14.59% annually.
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