The Vanguard Total World Stock Index Fund ETF Shares (VT) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VT and XLC? And which fund is better?
The expense ratio of VT is 0.04 percentage points lower than XLC’s (0.08% vs. 0.12%). VT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VT has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare VT vs. XLC. We’ll look at performance and annual returns, as well as at their holdings and fund composition. Moreover, I’ll also discuss VT’s and XLC’s industry exposure, risk metrics, and portfolio growth and examine how these affect their overall returns.
Summary
| VT | XLC | |
| Name | Vanguard Total World Stock Index Fund ETF Shares | Communication Services Select Sector SPDR Fund |
| Category | N/A | Communications |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 30.44B | 14.09B |
| Avg. Return | 10.42% | 29.04% |
| Div. Yield | 1.65% | 0.62% |
| Expense Ratio | 0.08% | 0.12% |
The Vanguard Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.
The Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
VT’s dividend yield is 1.03% higher than that of XLC (1.65% vs. 0.62%). Also, VT yielded on average 18.62% less per year over the past decade (10.42% vs. 29.04%). The expense ratio of VT is 0.04 percentage points lower than XLC’s (0.08% vs. 0.12%).
Fund Composition
Industry Exposure
| VT | XLC | |
| Technology | 19.63% | 0.0% |
| Industrials | 10.7% | 0.0% |
| Energy | 3.48% | 0.0% |
| Communication Services | 9.02% | 100.0% |
| Utilities | 2.6% | 0.0% |
| Healthcare | 11.58% | 0.0% |
| Consumer Defensive | 6.71% | 0.0% |
| Real Estate | 3.64% | 0.0% |
| Financial Services | 15.36% | 0.0% |
| Consumer Cyclical | 12.32% | 0.0% |
| Basic Materials | 4.97% | 0.0% |
The Vanguard Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.
VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.
The Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services 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.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VT is 19.63% more exposed to the Technology sector than XLC (19.63% vs 0.0%). VT’s exposure to Financial Services and Consumer Cyclical stocks is 15.36% higher and 12.32% higher respectively (15.36% vs. 0.0% and 12.32% vs. 0.0%). In total, Energy, Real Estate, and Basic Materials also make up 12.09% more of the fund’s holdings compared to XLC (12.09% vs. 0.00%).
Holdings
| VT Holdings | Weight |
| Apple Inc | 2.85% |
| Microsoft Corp | 2.71% |
| Amazon.com Inc | 1.98% |
| Facebook Inc Class A | 1.1% |
| Alphabet Inc Class A | 0.97% |
| Alphabet Inc Class C | 0.95% |
| Tesla Inc | 0.7% |
| NVIDIA Corp | 0.64% |
| JPMorgan Chase & Co | 0.62% |
| Tencent Holdings Ltd | 0.6% |
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
Risk Analysis
| VT | XLC | |
| Mean Return | 0.9 | 0 |
| R-squared | 99.35 | 0 |
| Std. Deviation | 14.19 | 0 |
| Alpha | 0.2 | 0 |
| Beta | 1.01 | 0 |
| Sharpe Ratio | 0.71 | 0 |
| Treynor Ratio | 9.5 | 0 |
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a Sharpe Ratio of 0.71 and a Treynor Ratio of 9.5. Its Alpha is 0.2 while VT’s R-squared is 99.35. Furthermore, the fund has a Mean Return of 0.9 and a Standard Deviation of 14.19.
The Communication Services Select Sector SPDR Fund (XLC) has a Standard Deviation of 0 with a Beta of 0 and a Mean Return of 0. Its R-squared is 0 while XLC’s Sharpe Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Treynor Ratio of 0.
VT’s Mean Return is 0.90 points higher than that of XLC and its R-squared is 99.35 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than XLC. The Alpha and Beta of VT are 0.20 points higher and 1.01 points higher than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | VT | XLC |
| 2020 | 16.74% | 26.85% |
| 2019 | 26.8% | 31.22% |
| 2018 | -9.67% | 0.0% |
| 2017 | 24.19% | 0.0% |
| 2016 | 8.77% | 0.0% |
| 2015 | -1.88% | 0.0% |
| 2014 | 3.97% | 0.0% |
| 2013 | 22.98% | 0.0% |
| 2012 | 17.33% | 0.0% |
| 2011 | -7.71% | 0.0% |
| 2010 | 13.05% | 0.0% |
VT had its best year in 2019 with an annual return of 26.8%. VT’s worst year over the past decade yielded -9.67% and occurred in 2018. In most years the Vanguard Total World Stock Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 8.77%, 13.05%, and 16.74% respectively.
The year 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VT | $10,000 | $14,802 | 10.42% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in VT would have resulted in a final balance of $14,802. This is a profit of $4,802 over 2 years and amounts to a compound annual growth rate (CAGR) of 10.42%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
VT’s CAGR is 18.62 percentage points lower than that of XLC and as a result, would have yielded $1,843 less on a $10,000 investment. Thus, VT performed worse than XLC by 18.62% annually.
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