The Vanguard S&P 500 ETF (VOO) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between VOO and XLE? And which fund is better?
The expense ratio of VOO is 0.09 percentage points lower than XLE’s (0.03% vs. 0.12%). VOO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VOO has provided higher returns than XLE over the past ten years.
In this article, we’ll compare VOO vs. XLE. We’ll look at portfolio growth and industry exposure, as well as at their risk metrics and performance. Moreover, I’ll also discuss VOO’s and XLE’s fund composition, annual returns, and holdings and examine how these affect their overall returns.
|Name||Vanguard S&P 500 ETF||Energy Select Sector SPDR Fund|
|Category||Large Blend||Equity Energy|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 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%.
VOO’s dividend yield is 2.58% lower than that of XLE (1.34% vs. 3.92%). Also, VOO yielded on average 13.17% more per year over the past decade (14.45% vs. 1.28%). The expense ratio of VOO is 0.09 percentage points lower than XLE’s (0.03% vs. 0.12%).
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 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%.
VOO is 24.24% more exposed to the Technology sector than XLE (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 92.15% less of the fund’s holdings compared to XLE (7.85% vs. 100.00%).
|Facebook Inc Class A||2.29%|
|Alphabet Inc Class A||2.02%|
|Alphabet Inc Class C||1.97%|
|Berkshire Hathaway Inc Class B||1.44%|
|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%.
|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%.
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 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 VOO would have resulted in a final balance of $36,575. This is a profit of $26,575 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.45%.
With a $10,000 investment in XLE, the end total would have been $7,674. This equates to a $-2,326 profit over 10 years and a compound annual growth rate (CAGR) of 1.28%.
VOO’s CAGR is 13.17 percentage points higher than that of XLE and as a result, would have yielded $28,901 more on a $10,000 investment. Thus, VOO outperformed XLE by 13.17% annually.
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