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VOO vs. XLV: What’s The Difference?

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.

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Summary

VOOXLV
NameVanguard S&P 500 ETFHealth Care Select Sector SPDR Fund
CategoryLarge BlendHealth
IssuerVanguardSPDR State Street Global Advisors
AUM753.41B27.88B
Avg. Return14.45%15.02%
Div. Yield1.34%1.4%
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 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%).

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Fund Composition

Industry Exposure

VOO vs. XLV - Industry Exposure

VOOXLV
Technology24.24%0.0%
Industrials8.86%0.0%
Energy2.84%0.0%
Communication Services11.14%0.0%
Utilities2.43%0.0%
Healthcare13.1%100.0%
Consumer Defensive6.32%0.0%
Real Estate2.58%0.0%
Financial Services14.2%0.0%
Consumer Cyclical12.01%0.0%
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 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

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%.

XLV - Holdings

XLV HoldingsWeight
Johnson & Johnson9.19%
UnitedHealth Group Inc8.01%
Pfizer Inc4.64%
Abbott Laboratories4.36%
AbbVie Inc4.21%
Thermo Fisher Scientific Inc4.2%
Merck & Co Inc4.17%
Eli Lilly and Co3.87%
Danaher Corp3.61%
Medtronic PLC3.54%

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%.

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Performance

Annual Returns

VOO vs. XLV - Annual Returns

YearVOOXLV
202018.35%13.33%
201931.46%20.63%
2018-4.42%6.3%
201721.78%21.7%
201611.93%-2.83%
20151.35%6.82%
201413.63%25.17%
201332.33%41.24%
201215.98%17.56%
20112.09%12.44%
20100.0%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

VOO vs. XLV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VOO$10,000$36,57514.45%
XLV$10,000$42,89915.02%

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.


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