The Vanguard Value Index Fund ETF Shares (VTV) and the Technology Select Sector SPDR Fund (XLK) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and XLK is a SPDR State Street Global Advisors Technology fund. So, what’s the difference between VTV and XLK? And which fund is better?
The expense ratio of VTV is 0.08 percentage points lower than XLK’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 XLK over the past ten years.
In this article, we’ll compare VTV vs. XLK. We’ll look at annual returns and holdings, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss VTV’s and XLK’s performance, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| VTV | XLK | |
| Name | Vanguard Value Index Fund ETF Shares | Technology Select Sector SPDR Fund |
| Category | Large Value | Technology |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 125.77B | 42.3B |
| Avg. Return | 12.07% | 20.02% |
| Div. Yield | 2.15% | 0.73% |
| 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 Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% with an expense ratio of 0.12%.
VTV’s dividend yield is 1.42% higher than that of XLK (2.15% vs. 0.73%). Also, VTV yielded on average 7.95% less per year over the past decade (12.07% vs. 20.02%). The expense ratio of VTV is 0.08 percentage points lower than XLK’s (0.04% vs. 0.12%).
Fund Composition
Industry Exposure
| VTV | XLK | |
| Technology | 7.86% | 87.54% |
| Industrials | 12.61% | 1.75% |
| Energy | 5.59% | 0.0% |
| 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% | 10.71% |
| 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 Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 87.54%. This is followed by Financial Services and Industrials at 10.71% and 1.75% 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.
XLK’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 1.75%.
VTV is 12.10% more exposed to the Financial Services sector than XLK (22.81% vs 10.71%). VTV’s exposure to Healthcare and Industrials stocks is 19.84% higher and 10.86% higher respectively (19.84% vs. 0.0% and 12.61% vs. 1.75%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 12.17% more of the fund’s holdings compared to XLK (12.17% vs. 0.00%).
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%.
| XLK Holdings | Weight |
| Apple Inc | 21.45% |
| Microsoft Corp | 20.37% |
| NVIDIA Corp | 4.98% |
| Visa Inc Class A | 3.95% |
| PayPal Holdings Inc | 3.42% |
| Mastercard Inc A | 3.19% |
| Adobe Inc | 2.8% |
| Salesforce.com Inc | 2.26% |
| Intel Corp | 2.26% |
| Cisco Systems Inc | 2.23% |
XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.
Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.
Risk Analysis
| VTV | XLK | |
| Mean Return | 1.05 | 1.7 |
| R-squared | 92.61 | 73.56 |
| Std. Deviation | 13.78 | 15.58 |
| Alpha | -1.92 | 10.43 |
| Beta | 0.98 | 0.95 |
| Sharpe Ratio | 0.87 | 1.27 |
| Treynor Ratio | 11.94 | 21.44 |
The Vanguard Value Index Fund ETF Shares (VTV) has a Sharpe Ratio of 0.87 with a R-squared of 92.61 and a Standard Deviation of 13.78. Its Treynor Ratio is 11.94 while VTV’s Alpha is -1.92. Furthermore, the fund has a Beta of 0.98 and a Mean Return of 1.05.
The Technology Select Sector SPDR Fund (XLK) has a Treynor Ratio of 21.44 with a R-squared of 73.56 and a Sharpe Ratio of 1.27. Its Standard Deviation is 15.58 while XLK’s Beta is 0.95. Furthermore, the fund has a Alpha of 10.43 and a Mean Return of 1.7.
VTV’s Mean Return is 0.65 points lower than that of XLK and its R-squared is 19.05 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than XLK. The Alpha and Beta of VTV are 12.35 points lower and 0.03 points higher than XLK’s Alpha and Beta.
Performance
Annual Returns
| Year | VTV | XLK |
| 2020 | 2.23% | 43.67% |
| 2019 | 25.85% | 49.97% |
| 2018 | -5.39% | -1.56% |
| 2017 | 17.12% | 34.27% |
| 2016 | 16.88% | 14.81% |
| 2015 | -0.89% | 5.62% |
| 2014 | 13.19% | 17.75% |
| 2013 | 33.03% | 25.98% |
| 2012 | 15.19% | 15.47% |
| 2011 | 1.16% | 2.69% |
| 2010 | 14.45% | 11.6% |
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 XLK, returning 49.97% on an annual basis. The poorest year for XLK in the last ten years was 2018, with a yield of -1.56%. Most years the Technology Select Sector SPDR Fund has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 14.81%, 15.47%, and 17.75% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTV | $10,000 | $33,163 | 12.07% |
| XLK | $10,000 | $67,790 | 20.02% |
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 XLK, the end total would have been $67,790. This equates to a $57,790 profit over 11 years and a compound annual growth rate (CAGR) of 20.02%.
VTV’s CAGR is 7.95 percentage points lower than that of XLK and as a result, would have yielded $34,627 less on a $10,000 investment. Thus, VTV performed worse than XLK by 7.95% 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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
