VOO vs. XLY: What’s The Difference?

The Vanguard S&P 500 ETF (VOO) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between VOO and XLY? And which fund is better?

The expense ratio of VOO is 0.09 percentage points lower than XLY’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 lower returns than XLY over the past ten years.

In this article, we’ll compare VOO vs. XLY. We’ll look at holdings and annual returns, as well as at their performance and risk metrics. Moreover, I’ll also discuss VOO’s and XLY’s industry exposure, portfolio growth, and fund composition and examine how these affect their overall returns.

Summary

VOO XLY
Name Vanguard S&P 500 ETF Consumer Discretionary Select Sector SPDR Fund
Category Large Blend Consumer Cyclical
Issuer Vanguard SPDR State Street Global Advisors
AUM 753.41B 20.21B
Avg. Return 14.45% 18.86%
Div. Yield 1.34% 0.63%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

VOO’s dividend yield is 0.71% higher than that of XLY (1.34% vs. 0.63%). Also, VOO yielded on average 4.41% less per year over the past decade (14.45% vs. 18.86%). The expense ratio of VOO is 0.09 percentage points lower than XLY’s (0.03% vs. 0.12%).

Fund Composition

Industry Exposure

VOO vs. XLY - Industry Exposure

VOO XLY
Technology 24.24% 0.57%
Industrials 8.86% 0.0%
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% 5.34%
Real Estate 2.58% 0.0%
Financial Services 14.2% 0.0%
Consumer Cyclical 12.01% 94.1%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

VOO is 23.67% more exposed to the Technology sector than XLY (24.24% vs 0.57%). 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 XLY (7.85% vs. 0.00%).

Holdings

VOO - 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%.

XLY - Holdings

XLY Holdings Weight
Amazon.com Inc 22.9%
Tesla Inc 13.5%
The Home Depot Inc 8.74%
McDonald’s Corp 4.5%
Nike Inc B 4.45%
Lowe’s Companies Inc 3.58%
Starbucks Corp 3.44%
Target Corp 3.12%
Booking Holdings Inc 2.35%
TJX Companies Inc 2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

Performance

Annual Returns

VOO vs. XLY - Annual Returns

Year VOO XLY
2020 18.35% 29.66%
2019 31.46% 28.43%
2018 -4.42% 1.66%
2017 21.78% 22.77%
2016 11.93% 5.87%
2015 1.35% 9.93%
2014 13.63% 9.49%
2013 32.33% 42.74%
2012 15.98% 23.6%
2011 2.09% 5.98%
2010 0.0% 27.36%

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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.

Portfolio Growth

VOO vs. XLY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VOO $10,000 $36,575 14.45%
XLY $10,000 $49,518 18.86%

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 XLY, the end total would have been $49,518. This equates to a $39,518 profit over 10 years and a compound annual growth rate (CAGR) of 18.86%.

VOO’s CAGR is 4.41 percentage points lower than that of XLY and as a result, would have yielded $12,943 less on a $10,000 investment. Thus, VOO performed worse than XLY by 4.41% annually.


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