The Vanguard Value Index Fund ETF Shares (VTV) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between VTV and XLI? And which fund is better?
The expense ratio of VTV is 0.08 percentage points lower than XLI’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 lower returns than XLI over the past ten years.
In this article, we’ll compare VTV vs. XLI. We’ll look at fund composition and risk metrics, as well as at their annual returns and holdings. Moreover, I’ll also discuss VTV’s and XLI’s industry exposure, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||Industrial Select Sector SPDR Fund|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% with an expense ratio of 0.12%.
VTV’s dividend yield is 0.90% higher than that of XLI (2.15% vs. 1.25%). Also, VTV yielded on average 2.37% less per year over the past decade (12.07% vs. 14.44%). The expense ratio of VTV is 0.08 percentage points lower than XLI’s (0.04% vs. 0.12%).
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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 Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.
VTV is 22.81% more exposed to the Financial Services sector than XLI (22.81% vs 0.0%). VTV’s exposure to Healthcare and Industrials stocks is 19.84% higher and 84.88% lower respectively (19.84% vs. 0.0% and 12.61% vs. 97.49%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 11.48% more of the fund’s holdings compared to XLI (12.17% vs. 0.69%).
|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%|
|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%.
|Honeywell International Inc||4.9%|
|United Parcel Service Inc Class B||4.84%|
|Union Pacific Corp||4.7%|
|Raytheon Technologies Corp||4.16%|
|General Electric Co||3.8%|
|Deere & Co||3.54%|
|Lockheed Martin Corp||2.98%|
XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.
Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.
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The Vanguard Value Index Fund ETF Shares (VTV) has a Mean Return of 1.05 with a Standard Deviation of 13.78 and a Sharpe Ratio of 0.87. Its R-squared is 92.61 while VTV’s Beta is 0.98. Furthermore, the fund has a Alpha of -1.92 and a Treynor Ratio of 11.94.
The Industrial Select Sector SPDR Fund (XLI) has a Alpha of 2.38 with a Mean Return of 1.14 and a R-squared of 78.97. Its Standard Deviation is 17.13 while XLI’s Sharpe Ratio is 0.76. Furthermore, the fund has a Treynor Ratio of 11.34 and a Beta of 1.08.
VTV’s Mean Return is 0.09 points lower than that of XLI and its R-squared is 13.64 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than XLI. The Alpha and Beta of VTV are 4.30 points lower and 0.10 points lower than XLI’s Alpha and Beta.
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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 XLI, returning 40.44% on an annual basis. The poorest year for XLI in the last ten years was 2018, with a yield of -13.1%. Most years the Industrial Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2012, and 2016, when gains were 11.0%, 14.86%, and 19.93% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 XLI, the end total would have been $39,853. This equates to a $29,853 profit over 11 years and a compound annual growth rate (CAGR) of 14.44%.
VTV’s CAGR is 2.37 percentage points lower than that of XLI and as a result, would have yielded $6,690 less on a $10,000 investment. Thus, VTV performed worse than XLI by 2.37% annually.
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