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VTV vs. XLV: What’s The Difference?

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

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

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

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Summary

VTVXLV
NameVanguard Value Index Fund ETF SharesHealth Care Select Sector SPDR Fund
CategoryLarge ValueHealth
IssuerVanguardSPDR State Street Global Advisors
AUM125.77B27.88B
Avg. Return12.07%15.02%
Div. Yield2.15%1.4%
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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.

VTV’s dividend yield is 0.75% higher than that of XLV (2.15% vs. 1.4%). Also, VTV yielded on average 2.95% less per year over the past decade (12.07% vs. 15.02%). The expense ratio of VTV is 0.08 percentage points lower than XLV’s (0.04% vs. 0.12%).

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Fund Composition

Industry Exposure

VTV vs. XLV - Industry Exposure

VTVXLV
Technology7.86%0.0%
Industrials12.61%0.0%
Energy5.59%0.0%
Communication Services5.49%0.0%
Utilities5.37%0.0%
Healthcare19.84%100.0%
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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.

XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, Energy, 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 XLV (22.81% vs 0.0%). VTV’s exposure to Healthcare and Industrials stocks is 80.16% lower and 12.61% higher respectively (19.84% vs. 100.0% 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 XLV (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%.

XLV - Holdings

XLV HoldingsWeight
Johnson & Johnson9.19%
UnitedHealth Group Inc8.01%
Pfizer Inc4.64%
Abbott Laboratories4.36%
AbbVie Inc4.21%
Thermo Fisher Scientific Inc4.2%
Merck & Co Inc4.17%
Eli Lilly and Co3.87%
Danaher Corp3.61%
Medtronic PLC3.54%

XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.

Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.

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Risk Analysis

VTVXLV
Mean Return1.051.27
R-squared92.6158.19
Std. Deviation13.7812.94
Alpha-1.927.75
Beta0.980.7
Sharpe Ratio0.871.13
Treynor Ratio11.9421.1

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

The Health Care Select Sector SPDR Fund (XLV) has a Mean Return of 1.27 with a Alpha of 7.75 and a Treynor Ratio of 21.1. Its Beta is 0.7 while XLV’s R-squared is 58.19. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Standard Deviation of 12.94.

VTV’s Mean Return is 0.22 points lower than that of XLV and its R-squared is 34.42 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than XLV. The Alpha and Beta of VTV are 9.67 points lower and 0.28 points higher than XLV’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. XLV - Annual Returns

YearVTVXLV
20202.23%13.33%
201925.85%20.63%
2018-5.39%6.3%
201717.12%21.7%
201616.88%-2.83%
2015-0.89%6.82%
201413.19%25.17%
201333.03%41.24%
201215.19%17.56%
20111.16%12.44%
201014.45%2.91%

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 XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% respectively.

Portfolio Growth

VTV vs. XLV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTV$10,000$33,16312.07%
XLV$10,000$44,14715.02%

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 XLV, the end total would have been $44,147. This equates to a $34,147 profit over 11 years and a compound annual growth rate (CAGR) of 15.02%.

VTV’s CAGR is 2.95 percentage points lower than that of XLV and as a result, would have yielded $10,984 less on a $10,000 investment. Thus, VTV performed worse than XLV by 2.95% annually.


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