The Vanguard S&P 500 ETF (VOO) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between VOO and XLV? And which fund is better?
The expense ratio of VOO is 0.09 percentage points lower than XLV’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 XLV over the past ten years.
In this article, we’ll compare VOO vs. XLV. We’ll look at portfolio growth and performance, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss VOO’s and XLV’s risk metrics, holdings, and fund composition and examine how these affect their overall returns.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
Summary
| VOO | XLV | |
| Name | Vanguard S&P 500 ETF | Health Care Select Sector SPDR Fund |
| Category | Large Blend | Health |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 753.41B | 27.88B |
| Avg. Return | 14.45% | 15.02% |
| Div. Yield | 1.34% | 1.4% |
| 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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.
VOO’s dividend yield is 0.06% lower than that of XLV (1.34% vs. 1.4%). Also, VOO yielded on average 0.58% less per year over the past decade (14.45% vs. 15.02%). The expense ratio of VOO is 0.09 percentage points lower than XLV’s (0.03% vs. 0.12%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
Fund Composition
Industry Exposure
| VOO | XLV | |
| Technology | 24.24% | 0.0% |
| Industrials | 8.86% | 0.0% |
| Energy | 2.84% | 0.0% |
| Communication Services | 11.14% | 0.0% |
| Utilities | 2.43% | 0.0% |
| Healthcare | 13.1% | 100.0% |
| 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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.
XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, 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 XLV (24.24% vs 0.0%). VOO’s exposure to Financial Services and Healthcare stocks is 14.20% higher and 86.90% lower respectively (14.2% vs. 0.0% and 13.1% vs. 100.0%). In total, Utilities, Real Estate, and Energy also make up 7.85% more of the fund’s holdings compared to XLV (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%.
| XLV Holdings | Weight |
| Johnson & Johnson | 9.19% |
| UnitedHealth Group Inc | 8.01% |
| Pfizer Inc | 4.64% |
| Abbott Laboratories | 4.36% |
| AbbVie Inc | 4.21% |
| Thermo Fisher Scientific Inc | 4.2% |
| Merck & Co Inc | 4.17% |
| Eli Lilly and Co | 3.87% |
| Danaher Corp | 3.61% |
| Medtronic PLC | 3.54% |
XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.
Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.
Performance
Annual Returns
| Year | VOO | XLV |
| 2020 | 18.35% | 13.33% |
| 2019 | 31.46% | 20.63% |
| 2018 | -4.42% | 6.3% |
| 2017 | 21.78% | 21.7% |
| 2016 | 11.93% | -2.83% |
| 2015 | 1.35% | 6.82% |
| 2014 | 13.63% | 25.17% |
| 2013 | 32.33% | 41.24% |
| 2012 | 15.98% | 17.56% |
| 2011 | 2.09% | 12.44% |
| 2010 | 0.0% | 2.91% |
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 XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VOO | $10,000 | $36,575 | 14.45% |
| XLV | $10,000 | $42,899 | 15.02% |
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 XLV, the end total would have been $42,899. This equates to a $32,899 profit over 10 years and a compound annual growth rate (CAGR) of 15.02%.
VOO’s CAGR is 0.58 percentage points lower than that of XLV and as a result, would have yielded $6,324 less on a $10,000 investment. Thus, VOO performed worse than XLV by 0.58% 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.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
