VTV vs. XLE: What’s The Difference?

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

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

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

Summary

VTV XLE
Name Vanguard Value Index Fund ETF Shares Energy Select Sector SPDR Fund
Category Large Value Equity Energy
Issuer Vanguard SPDR State Street Global Advisors
AUM 125.77B 25.55B
Avg. Return 12.07% 1.28%
Div. Yield 2.15% 3.92%
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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.

VTV’s dividend yield is 1.77% lower than that of XLE (2.15% vs. 3.92%). Also, VTV yielded on average 10.79% more per year over the past decade (12.07% vs. 1.28%). The expense ratio of VTV is 0.08 percentage points lower than XLE’s (0.04% vs. 0.12%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VTV vs. XLE - Industry Exposure

VTV XLE
Technology 7.86% 0.0%
Industrials 12.61% 0.0%
Energy 5.59% 100.0%
Communication Services 5.49% 0.0%
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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.

XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (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 XLE (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%.

XLE - Holdings

XLE Holdings Weight
Exxon Mobil Corp 23.7%
Chevron Corp 20.03%
ConocoPhillips 4.64%
EOG Resources Inc 4.46%
Schlumberger Ltd 4.43%
Marathon Petroleum Corp 4.17%
Pioneer Natural Resources Co 4.08%
Phillips 66 4.07%
Kinder Morgan Inc Class P 3.85%
Williams Companies Inc 3.5%

XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.

Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VTV XLE
Mean Return 1.05 0.32
R-squared 92.61 61.84
Std. Deviation 13.78 27.52
Alpha -1.92 -11.98
Beta 0.98 1.54
Sharpe Ratio 0.87 0.12
Treynor Ratio 11.94 -0.4

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

The Energy Select Sector SPDR Fund (XLE) has a R-squared of 61.84 with a Beta of 1.54 and a Sharpe Ratio of 0.12. Its Standard Deviation is 27.52 while XLE’s Alpha is -11.98. Furthermore, the fund has a Treynor Ratio of -0.4 and a Mean Return of 0.32.

VTV’s Mean Return is 0.73 points higher than that of XLE and its R-squared is 30.77 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than XLE. The Alpha and Beta of VTV are 10.06 points higher and 0.56 points lower than XLE’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Gemini - the simplest and cheapest broker I've found! Click here to read more (link to Gemini).

Performance

Annual Returns

VTV vs. XLE - Annual Returns

Year VTV XLE
2020 2.23% -32.56%
2019 25.85% 11.87%
2018 -5.39% -18.1%
2017 17.12% -1.01%
2016 16.88% 27.95%
2015 -0.89% -21.47%
2014 13.19% -8.61%
2013 33.03% 26.16%
2012 15.19% 5.17%
2011 1.16% 2.98%
2010 14.45% 21.7%

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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.

Portfolio Growth

VTV vs. XLE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $33,163 12.07%
XLE $10,000 $9,339 1.28%

A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.

With a $10,000 investment in XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.

VTV’s CAGR is 10.79 percentage points higher than that of XLE and as a result, would have yielded $23,824 more on a $10,000 investment. Thus, VTV outperformed XLE by 10.79% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply