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VTI vs. XLK: What’s The Difference?

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the Technology Select Sector SPDR Fund (XLK) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and XLK is a SPDR State Street Global Advisors Technology fund. So, what’s the difference between VTI and XLK? And which fund is better?

The expense ratio of VTI is 0.09 percentage points lower than XLK’s (0.03% vs. 0.12%). VTI also has a lower exposure to the technology sector and a lower standard deviation. Overall, VTI has provided lower returns than XLK over the past ten years.

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

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Summary

VTIXLK
NameVanguard Total Stock Market Index Fund ETF SharesTechnology Select Sector SPDR Fund
CategoryLarge BlendTechnology
IssuerVanguardSPDR State Street Global Advisors
AUM1.26T42.3B
Avg. Return14.70%20.02%
Div. Yield1.26%0.73%
Expense Ratio0.03%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 Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% with an expense ratio of 0.12%.

VTI’s dividend yield is 0.53% higher than that of XLK (1.26% vs. 0.73%). Also, VTI yielded on average 5.33% less per year over the past decade (14.70% vs. 20.02%). The expense ratio of VTI is 0.09 percentage points lower than XLK’s (0.03% vs. 0.12%).

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Fund Composition

Industry Exposure

VTI vs. XLK - Industry Exposure

VTIXLK
Technology24.1%87.54%
Industrials9.39%1.75%
Energy2.77%0.0%
Communication Services10.4%0.0%
Utilities2.29%0.0%
Healthcare13.64%0.0%
Consumer Defensive5.77%0.0%
Real Estate3.59%0.0%
Financial Services13.77%10.71%
Consumer Cyclical11.83%0.0%
Basic Materials2.44%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 Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 87.54%. This is followed by Financial Services and Industrials at 10.71% and 1.75% 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.

XLK’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 1.75%.

VTI is 63.44% less exposed to the Technology sector than XLK (24.1% vs 87.54%). VTI’s exposure to Financial Services and Healthcare stocks is 3.06% higher and 13.64% higher respectively (13.77% vs. 10.71% 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 XLK (8.80% vs. 0.00%).

Holdings

VTI - Holdings

VTI HoldingsWeight
Apple Inc4.9%
Microsoft Corp4.6%
Amazon.com Inc3.33%
Facebook Inc Class A1.88%
Alphabet Inc Class A1.66%
Alphabet Inc Class C1.56%
Tesla Inc1.18%
Berkshire Hathaway Inc Class B1.09%
NVIDIA Corp1.07%
JPMorgan Chase & Co1.06%

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%.

XLK - Holdings

XLK HoldingsWeight
Apple Inc21.45%
Microsoft Corp20.37%
NVIDIA Corp4.98%
Visa Inc Class A3.95%
PayPal Holdings Inc3.42%
Mastercard Inc A3.19%
Adobe Inc2.8%
Salesforce.com Inc2.26%
Intel Corp2.26%
Cisco Systems Inc2.23%

XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.

Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.

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Performance

Annual Returns

VTI vs. XLK - Annual Returns

YearVTIXLK
202020.95%43.67%
201930.8%49.97%
2018-5.13%-1.56%
201721.16%34.27%
201612.68%14.81%
20150.4%5.62%
201412.56%17.75%
201333.51%25.98%
201216.41%15.47%
20111.06%2.69%
201017.26%11.6%

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 2019 was the strongest year for XLK, returning 49.97% on an annual basis. The poorest year for XLK in the last ten years was 2018, with a yield of -1.56%. Most years the Technology Select Sector SPDR Fund has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 14.81%, 15.47%, and 17.75% respectively.

Portfolio Growth

VTI vs. XLK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTI$10,000$42,64814.70%
XLK$10,000$67,79020.02%

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 XLK, the end total would have been $67,790. This equates to a $57,790 profit over 11 years and a compound annual growth rate (CAGR) of 20.02%.

VTI’s CAGR is 5.33 percentage points lower than that of XLK and as a result, would have yielded $25,142 less on a $10,000 investment. Thus, VTI performed worse than XLK by 5.33% annually.


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