VTV vs. XLC: What’s The Difference?

The Vanguard Value Index Fund ETF Shares (VTV) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VTV and XLC? And which fund is better?

The expense ratio of VTV is 0.08 percentage points lower than XLC’s (0.04% vs. 0.12%). VTV also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VTV has provided lower returns than XLC over the past ten years.

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

Summary

VTV XLC
Name Vanguard Value Index Fund ETF Shares Communication Services Select Sector SPDR Fund
Category Large Value Communications
Issuer Vanguard SPDR State Street Global Advisors
AUM 125.77B 14.09B
Avg. Return 12.07% 29.04%
Div. Yield 2.15% 0.62%
Expense Ratio 0.04% 0.12%

The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.

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%.

VTV’s dividend yield is 1.53% higher than that of XLC (2.15% vs. 0.62%). Also, VTV yielded on average 16.96% less per year over the past decade (12.07% vs. 29.04%). The expense ratio of VTV is 0.08 percentage points lower than XLC’s (0.04% vs. 0.12%).

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Fund Composition

Industry Exposure

VTV vs. XLC - Industry Exposure

VTV XLC
Technology 7.86% 0.0%
Industrials 12.61% 0.0%
Energy 5.59% 0.0%
Communication Services 5.49% 100.0%
Utilities 5.37% 0.0%
Healthcare 19.84% 0.0%
Consumer Defensive 10.72% 0.0%
Real Estate 3.01% 0.0%
Financial Services 22.81% 0.0%
Consumer Cyclical 3.79% 0.0%
Basic Materials 2.91% 0.0%

The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.

VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.

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%.

VTV is 22.81% more exposed to the Financial Services sector than XLC (22.81% vs 0.0%). VTV’s exposure to Healthcare and Industrials stocks is 19.84% higher and 12.61% higher respectively (19.84% vs. 0.0% and 12.61% vs. 0.0%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 12.17% more of the fund’s holdings compared to XLC (12.17% vs. 0.00%).

Holdings

VTV - Holdings

VTV Holdings Weight
Berkshire Hathaway Inc Class B 2.98%
JPMorgan Chase & Co 2.82%
Johnson & Johnson 2.6%
UnitedHealth Group Inc 2.27%
Procter & Gamble Co 1.98%
Bank of America Corp 1.91%
Exxon Mobil Corp 1.6%
Comcast Corp Class A 1.57%
Intel Corp 1.36%
Verizon Communications Inc 1.32%

VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.

Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.

XLC - Holdings

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%.

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Risk Analysis

VTV XLC
Mean Return 1.05 0
R-squared 92.61 0
Std. Deviation 13.78 0
Alpha -1.92 0
Beta 0.98 0
Sharpe Ratio 0.87 0
Treynor Ratio 11.94 0

The Vanguard Value Index Fund ETF Shares (VTV) has a Treynor Ratio of 11.94 with a Sharpe Ratio of 0.87 and a Alpha of -1.92. Its Standard Deviation is 13.78 while VTV’s Mean Return is 1.05. Furthermore, the fund has a R-squared of 92.61 and a Beta of 0.98.

The Communication Services Select Sector SPDR Fund (XLC) has a Sharpe Ratio of 0 with a Alpha of 0 and a Beta of 0. Its Mean Return is 0 while XLC’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.

VTV’s Mean Return is 1.05 points higher than that of XLC and its R-squared is 92.61 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than XLC. The Alpha and Beta of VTV are 1.92 points lower and 0.98 points higher than XLC’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. XLC - Annual Returns

Year VTV XLC
2020 2.23% 26.85%
2019 25.85% 31.22%
2018 -5.39% 0.0%
2017 17.12% 0.0%
2016 16.88% 0.0%
2015 -0.89% 0.0%
2014 13.19% 0.0%
2013 33.03% 0.0%
2012 15.19% 0.0%
2011 1.16% 0.0%
2010 14.45% 0.0%

VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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

VTV vs. XLC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $12,865 12.07%
XLC $10,000 $16,645 29.04%

A $10,000 investment in VTV would have resulted in a final balance of $12,865. This is a profit of $2,865 over 2 years and amounts to a compound annual growth rate (CAGR) of 12.07%.

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%.

VTV’s CAGR is 16.96 percentage points lower than that of XLC and as a result, would have yielded $3,780 less on a $10,000 investment. Thus, VTV performed worse than XLC by 16.96% annually.


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