The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the Financial Select Sector SPDR Fund (XLF) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and XLF is a SPDR State Street Global Advisors Financial fund. So, what’s the difference between VTI and XLF? And which fund is better?
The expense ratio of VTI is 0.09 percentage points lower than XLF’s (0.03% vs. 0.12%). VTI also has a higher exposure to the technology sector and a lower standard deviation. Overall, VTI has provided higher returns than XLF over the past ten years.
In this article, we’ll compare VTI vs. XLF. We’ll look at holdings and performance, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss VTI’s and XLF’s fund composition, portfolio growth, and industry exposure and examine how these affect their overall returns.
Summary
| VTI | XLF | |
| Name | Vanguard Total Stock Market Index Fund ETF Shares | Financial Select Sector SPDR Fund |
| Category | Large Blend | Financial |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 1.26T | 40.81B |
| Avg. Return | 14.70% | 12.17% |
| Div. Yield | 1.26% | 1.57% |
| Expense Ratio | 0.03% | 0.12% |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.
The Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.
VTI’s dividend yield is 0.31% lower than that of XLF (1.26% vs. 1.57%). Also, VTI yielded on average 2.53% more per year over the past decade (14.70% vs. 12.17%). The expense ratio of VTI is 0.09 percentage points lower than XLF’s (0.03% vs. 0.12%).
Fund Composition
Industry Exposure
| VTI | XLF | |
| Technology | 24.1% | 0.0% |
| Industrials | 9.39% | 0.0% |
| Energy | 2.77% | 0.0% |
| Communication Services | 10.4% | 0.0% |
| Utilities | 2.29% | 0.0% |
| Healthcare | 13.64% | 0.0% |
| Consumer Defensive | 5.77% | 0.0% |
| Real Estate | 3.59% | 0.0% |
| Financial Services | 13.77% | 100.0% |
| Consumer Cyclical | 11.83% | 0.0% |
| Basic Materials | 2.44% | 0.0% |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has the most exposure to the Technology sector at 24.1%. This is followed by Financial Services and Healthcare at 13.77% and 13.64% respectively. Basic Materials (2.44%), Energy (2.77%), and Real Estate (3.59%) only make up 8.80% of the fund’s total assets.
VTI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.77%, 9.39%, 10.4%, 11.83%, and 13.64%.
The Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLF’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VTI is 24.10% more exposed to the Technology sector than XLF (24.1% vs 0.0%). VTI’s exposure to Financial Services and Healthcare stocks is 86.23% lower and 13.64% higher respectively (13.77% vs. 100.0% and 13.64% vs. 0.0%). In total, Basic Materials, Energy, and Real Estate also make up 8.80% more of the fund’s holdings compared to XLF (8.80% vs. 0.00%).
Holdings
| VTI Holdings | Weight |
| Apple Inc | 4.9% |
| Microsoft Corp | 4.6% |
| Amazon.com Inc | 3.33% |
| Facebook Inc Class A | 1.88% |
| Alphabet Inc Class A | 1.66% |
| Alphabet Inc Class C | 1.56% |
| Tesla Inc | 1.18% |
| Berkshire Hathaway Inc Class B | 1.09% |
| NVIDIA Corp | 1.07% |
| JPMorgan Chase & Co | 1.06% |
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
| XLF Holdings | Weight |
| Berkshire Hathaway Inc Class B | 12.83% |
| JPMorgan Chase & Co | 11.47% |
| Bank of America Corp | 7.57% |
| Wells Fargo & Co | 4.56% |
| Citigroup Inc | 3.56% |
| Morgan Stanley | 3.32% |
| Goldman Sachs Group Inc | 3.15% |
| BlackRock Inc | 3.02% |
| Charles Schwab Corp | 2.66% |
| American Express Co | 2.62% |
XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.
Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.
Performance
Annual Returns
| Year | VTI | XLF |
| 2020 | 20.95% | -1.68% |
| 2019 | 30.8% | 31.88% |
| 2018 | -5.13% | -13.09% |
| 2017 | 21.16% | 22.03% |
| 2016 | 12.68% | 22.55% |
| 2015 | 0.4% | -1.6% |
| 2014 | 12.56% | 15.02% |
| 2013 | 33.51% | 35.37% |
| 2012 | 16.41% | 28.53% |
| 2011 | 1.06% | -17.16% |
| 2010 | 17.26% | 11.97% |
VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% respectively.
The year 2013 was the strongest year for XLF, returning 35.37% on an annual basis. The poorest year for XLF in the last ten years was 2011, with a yield of -17.16%. Most years the Financial Select Sector SPDR Fund has given investors modest returns, such as in 2010, 2014, and 2017, when gains were 11.97%, 15.02%, and 22.03% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTI | $10,000 | $42,648 | 14.70% |
| XLF | $10,000 | $30,782 | 12.17% |
A $10,000 investment in VTI would have resulted in a final balance of $42,648. This is a profit of $32,648 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
With a $10,000 investment in XLF, the end total would have been $30,782. This equates to a $20,782 profit over 11 years and a compound annual growth rate (CAGR) of 12.17%.
VTI’s CAGR is 2.53 percentage points higher than that of XLF and as a result, would have yielded $11,866 more on a $10,000 investment. Thus, VTI outperformed XLF by 2.53% annually.
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