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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.

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Summary

VTVXLE
NameVanguard Value Index Fund ETF SharesEnergy Select Sector SPDR Fund
CategoryLarge ValueEquity Energy
IssuerVanguardSPDR State Street Global Advisors
AUM125.77B25.55B
Avg. Return12.07%1.28%
Div. Yield2.15%3.92%
Expense Ratio0.04%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%).

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Fund Composition

Industry Exposure

VTV vs. XLE - Industry Exposure

VTVXLE
Technology7.86%0.0%
Industrials12.61%0.0%
Energy5.59%100.0%
Communication Services5.49%0.0%
Utilities5.37%0.0%
Healthcare19.84%0.0%
Consumer Defensive10.72%0.0%
Real Estate3.01%0.0%
Financial Services22.81%0.0%
Consumer Cyclical3.79%0.0%
Basic Materials2.91%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 HoldingsWeight
Berkshire Hathaway Inc Class B2.98%
JPMorgan Chase & Co2.82%
Johnson & Johnson2.6%
UnitedHealth Group Inc2.27%
Procter & Gamble Co1.98%
Bank of America Corp1.91%
Exxon Mobil Corp1.6%
Comcast Corp Class A1.57%
Intel Corp1.36%
Verizon Communications Inc1.32%

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 HoldingsWeight
Exxon Mobil Corp23.7%
Chevron Corp20.03%
ConocoPhillips4.64%
EOG Resources Inc4.46%
Schlumberger Ltd4.43%
Marathon Petroleum Corp4.17%
Pioneer Natural Resources Co4.08%
Phillips 664.07%
Kinder Morgan Inc Class P3.85%
Williams Companies Inc3.5%

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%.

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Risk Analysis

VTVXLE
Mean Return1.050.32
R-squared92.6161.84
Std. Deviation13.7827.52
Alpha-1.92-11.98
Beta0.981.54
Sharpe Ratio0.870.12
Treynor Ratio11.94-0.4

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.

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Performance

Annual Returns

VTV vs. XLE - Annual Returns

YearVTVXLE
20202.23%-32.56%
201925.85%11.87%
2018-5.39%-18.1%
201717.12%-1.01%
201616.88%27.95%
2015-0.89%-21.47%
201413.19%-8.61%
201333.03%26.16%
201215.19%5.17%
20111.16%2.98%
201014.45%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

FundInitial BalanceFinal BalanceCAGR
VTV$10,000$33,16312.07%
XLE$10,000$9,3391.28%

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.


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