The Vanguard S&P 500 ETF (VOO) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between VOO and XLI? And which fund is better?
The expense ratio of VOO is 0.09 percentage points lower than XLI’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 XLI over the past ten years.
In this article, we’ll compare VOO vs. XLI. We’ll look at portfolio growth and fund composition, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VOO’s and XLI’s industry exposure, holdings, and performance and examine how these affect their overall returns.
Summary
| VOO | XLI | |
| Name | Vanguard S&P 500 ETF | Industrial Select Sector SPDR Fund |
| Category | Large Blend | Industrials |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 753.41B | 19.33B |
| Avg. Return | 14.45% | 14.44% |
| Div. Yield | 1.34% | 1.25% |
| 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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.
VOO’s dividend yield is 0.09% higher than that of XLI (1.34% vs. 1.25%). Also, VOO yielded on average 0.01% more per year over the past decade (14.45% vs. 14.44%). The expense ratio of VOO is 0.09 percentage points lower than XLI’s (0.03% vs. 0.12%).
Fund Composition
Industry Exposure
| VOO | XLI | |
| Technology | 24.24% | 1.82% |
| Industrials | 8.86% | 97.49% |
| Energy | 2.84% | 0.0% |
| Communication Services | 11.14% | 0.0% |
| 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% | 0.69% |
| 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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.
VOO is 22.42% more exposed to the Technology sector than XLI (24.24% vs 1.82%). 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 XLI (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%.
| XLI Holdings | Weight |
| Honeywell International Inc | 4.9% |
| United Parcel Service Inc Class B | 4.84% |
| Union Pacific Corp | 4.7% |
| Boeing Co | 4.24% |
| Raytheon Technologies Corp | 4.16% |
| Caterpillar Inc | 3.84% |
| General Electric Co | 3.8% |
| 3M Co | 3.7% |
| Deere & Co | 3.54% |
| Lockheed Martin Corp | 2.98% |
XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.
Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.
Performance
Annual Returns
| Year | VOO | XLI |
| 2020 | 18.35% | 11.0% |
| 2019 | 31.46% | 29.11% |
| 2018 | -4.42% | -13.1% |
| 2017 | 21.78% | 23.85% |
| 2016 | 11.93% | 19.93% |
| 2015 | 1.35% | -4.27% |
| 2014 | 13.63% | 10.44% |
| 2013 | 32.33% | 40.44% |
| 2012 | 15.98% | 14.86% |
| 2011 | 2.09% | -1.01% |
| 2010 | 0.0% | 27.62% |
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 2013 was the strongest year for XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VOO | $10,000 | $36,575 | 14.45% |
| XLI | $10,000 | $31,228 | 14.44% |
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 XLI, the end total would have been $31,228. This equates to a $21,228 profit over 10 years and a compound annual growth rate (CAGR) of 14.44%.
VOO’s CAGR is 0.01 percentage points higher than that of XLI and as a result, would have yielded $5,347 more on a $10,000 investment. Thus, VOO outperformed XLI by 0.01% annually.
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