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VTV vs. XLF: What’s The Difference?

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

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

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

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Summary

VTVXLF
NameVanguard Value Index Fund ETF SharesFinancial Select Sector SPDR Fund
CategoryLarge ValueFinancial
IssuerVanguardSPDR State Street Global Advisors
AUM125.77B40.81B
Avg. Return12.07%12.17%
Div. Yield2.15%1.57%
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 Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.

VTV’s dividend yield is 0.58% higher than that of XLF (2.15% vs. 1.57%). Also, VTV yielded on average 0.09% less per year over the past decade (12.07% vs. 12.17%). The expense ratio of VTV is 0.08 percentage points lower than XLF’s (0.04% vs. 0.12%).

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Fund Composition

Industry Exposure

VTV vs. XLF - Industry Exposure

VTVXLF
Technology7.86%0.0%
Industrials12.61%0.0%
Energy5.59%0.0%
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%100.0%
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 Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% 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.

XLF’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 0.0%.

VTV is 77.19% less exposed to the Financial Services sector than XLF (22.81% vs 100.0%). 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 XLF (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%.

XLF - Holdings

XLF HoldingsWeight
Berkshire Hathaway Inc Class B12.83%
JPMorgan Chase & Co11.47%
Bank of America Corp7.57%
Wells Fargo & Co4.56%
Citigroup Inc3.56%
Morgan Stanley3.32%
Goldman Sachs Group Inc3.15%
BlackRock Inc3.02%
Charles Schwab Corp2.66%
American Express Co2.62%

XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.

Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.

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Risk Analysis

VTVXLF
Mean Return1.051.21
R-squared92.6173.26
Std. Deviation13.7818.86
Alpha-1.922.63
Beta0.981.15
Sharpe Ratio0.870.74
Treynor Ratio11.9411.25

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

The Financial Select Sector SPDR Fund (XLF) has a Alpha of 2.63 with a Standard Deviation of 18.86 and a Beta of 1.15. Its Sharpe Ratio is 0.74 while XLF’s Treynor Ratio is 11.25. Furthermore, the fund has a R-squared of 73.26 and a Mean Return of 1.21.

VTV’s Mean Return is 0.16 points lower than that of XLF and its R-squared is 19.35 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than XLF. The Alpha and Beta of VTV are 4.55 points lower and 0.17 points lower than XLF’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. XLF - Annual Returns

YearVTVXLF
20202.23%-1.68%
201925.85%31.88%
2018-5.39%-13.09%
201717.12%22.03%
201616.88%22.55%
2015-0.89%-1.6%
201413.19%15.02%
201333.03%35.37%
201215.19%28.53%
20111.16%-17.16%
201014.45%11.97%

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 2013 was the strongest year for XLF, returning 35.37% on an annual basis. The poorest year for XLF in the last ten years was 2011, with a yield of -17.16%. Most years the Financial Select Sector SPDR Fund has given investors modest returns, such as in 2010, 2014, and 2017, when gains were 11.97%, 15.02%, and 22.03% respectively.

Portfolio Growth

VTV vs. XLF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTV$10,000$33,16312.07%
XLF$10,000$30,78212.17%

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 XLF, the end total would have been $30,782. This equates to a $20,782 profit over 11 years and a compound annual growth rate (CAGR) of 12.17%.

VTV’s CAGR is 0.09 percentage points lower than that of XLF and as a result, would have yielded $2,381 more on a $10,000 investment. Thus, VTV performed worse than XLF by 0.09% annually.


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