Skip to content

VOO vs. XLI: What’s The Difference?

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

VOOXLI
NameVanguard S&P 500 ETFIndustrial Select Sector SPDR Fund
CategoryLarge BlendIndustrials
IssuerVanguardSPDR State Street Global Advisors
AUM753.41B19.33B
Avg. Return14.45%14.44%
Div. Yield1.34%1.25%
Expense Ratio0.03%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 vs. XLI - Industry Exposure

VOOXLI
Technology24.24%1.82%
Industrials8.86%97.49%
Energy2.84%0.0%
Communication Services11.14%0.0%
Utilities2.43%0.0%
Healthcare13.1%0.0%
Consumer Defensive6.32%0.0%
Real Estate2.58%0.0%
Financial Services14.2%0.0%
Consumer Cyclical12.01%0.69%
Basic Materials2.27%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

VOO HoldingsWeight
Apple Inc5.92%
Microsoft Corp5.62%
Amazon.com Inc4.06%
Facebook Inc Class A2.29%
Alphabet Inc Class A2.02%
Alphabet Inc Class C1.97%
Tesla Inc1.44%
Berkshire Hathaway Inc Class B1.44%
NVIDIA Corp1.37%
JPMorgan Chase & Co1.3%

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

XLI HoldingsWeight
Honeywell International Inc4.9%
United Parcel Service Inc Class B4.84%
Union Pacific Corp4.7%
Boeing Co4.24%
Raytheon Technologies Corp4.16%
Caterpillar Inc3.84%
General Electric Co3.8%
3M Co3.7%
Deere & Co3.54%
Lockheed Martin Corp2.98%

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

VOO vs. XLI - Annual Returns

YearVOOXLI
202018.35%11.0%
201931.46%29.11%
2018-4.42%-13.1%
201721.78%23.85%
201611.93%19.93%
20151.35%-4.27%
201413.63%10.44%
201332.33%40.44%
201215.98%14.86%
20112.09%-1.01%
20100.0%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

VOO vs. XLI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VOO$10,000$36,57514.45%
XLI$10,000$31,22814.44%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Marvin Allen

Leave a Reply

Your email address will not be published. Required fields are marked *