The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between VTI and XLY? And which fund is better?
The expense ratio of VTI is 0.09 percentage points lower than XLY’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 lower returns than XLY over the past ten years.
In this article, we’ll compare VTI vs. XLY. We’ll look at fund composition and industry exposure, as well as at their holdings and annual returns. Moreover, I’ll also discuss VTI’s and XLY’s performance, portfolio growth, and risk metrics and examine how these affect their overall returns.
Summary
| VTI | XLY | |
| Name | Vanguard Total Stock Market Index Fund ETF Shares | Consumer Discretionary Select Sector SPDR Fund |
| Category | Large Blend | Consumer Cyclical |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 1.26T | 20.21B |
| Avg. Return | 14.70% | 18.86% |
| Div. Yield | 1.26% | 0.63% |
| 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 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%.
VTI’s dividend yield is 0.63% higher than that of XLY (1.26% vs. 0.63%). Also, VTI yielded on average 4.17% less per year over the past decade (14.70% vs. 18.86%). The expense ratio of VTI is 0.09 percentage points lower than XLY’s (0.03% vs. 0.12%).
Fund Composition
Industry Exposure
| VTI | XLY | |
| Technology | 24.1% | 0.57% |
| 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% | 5.34% |
| Real Estate | 3.59% | 0.0% |
| Financial Services | 13.77% | 0.0% |
| Consumer Cyclical | 11.83% | 94.1% |
| 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 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%.
VTI is 23.53% more exposed to the Technology sector than XLY (24.1% vs 0.57%). VTI’s exposure to Financial Services and Healthcare stocks is 13.77% higher and 13.64% higher respectively (13.77% vs. 0.0% 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 XLY (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%.
| 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
| Year | VTI | XLY |
| 2020 | 20.95% | 29.66% |
| 2019 | 30.8% | 28.43% |
| 2018 | -5.13% | 1.66% |
| 2017 | 21.16% | 22.77% |
| 2016 | 12.68% | 5.87% |
| 2015 | 0.4% | 9.93% |
| 2014 | 12.56% | 9.49% |
| 2013 | 33.51% | 42.74% |
| 2012 | 16.41% | 23.6% |
| 2011 | 1.06% | 5.98% |
| 2010 | 17.26% | 27.36% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| VTI | $10,000 | $42,648 | 14.70% |
| XLY | $10,000 | $63,066 | 18.86% |
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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.
VTI’s CAGR is 4.17 percentage points lower than that of XLY and as a result, would have yielded $20,418 less on a $10,000 investment. Thus, VTI performed worse than XLY by 4.17% annually.
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