VTV vs. XLY: What’s The Difference?

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

The expense ratio of VTV is 0.08 percentage points lower than XLY’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 XLY over the past ten years.

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

Summary

VTV XLY
Name Vanguard Value Index Fund ETF Shares Consumer Discretionary Select Sector SPDR Fund
Category Large Value Consumer Cyclical
Issuer Vanguard SPDR State Street Global Advisors
AUM 125.77B 20.21B
Avg. Return 12.07% 18.86%
Div. Yield 2.15% 0.63%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

VTV’s dividend yield is 1.52% higher than that of XLY (2.15% vs. 0.63%). Also, VTV yielded on average 6.79% less per year over the past decade (12.07% vs. 18.86%). The expense ratio of VTV is 0.08 percentage points lower than XLY’s (0.04% vs. 0.12%).

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Fund Composition

Industry Exposure

VTV vs. XLY - Industry Exposure

VTV XLY
Technology 7.86% 0.57%
Industrials 12.61% 0.0%
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% 5.34%
Real Estate 3.01% 0.0%
Financial Services 22.81% 0.0%
Consumer Cyclical 3.79% 94.1%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

VTV is 22.81% more exposed to the Financial Services sector than XLY (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 81.93% less of the fund’s holdings compared to XLY (12.17% vs. 94.10%).

Holdings

VTV - 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%.

XLY - Holdings

XLY Holdings Weight
Amazon.com Inc 22.9%
Tesla Inc 13.5%
The Home Depot Inc 8.74%
McDonald’s Corp 4.5%
Nike Inc B 4.45%
Lowe’s Companies Inc 3.58%
Starbucks Corp 3.44%
Target Corp 3.12%
Booking Holdings Inc 2.35%
TJX Companies Inc 2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

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Risk Analysis

VTV XLY
Mean Return 1.05 1.47
R-squared 92.61 80.84
Std. Deviation 13.78 15.97
Alpha -1.92 6.96
Beta 0.98 1.02
Sharpe Ratio 0.87 1.06
Treynor Ratio 11.94 16.69

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

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Beta of 1.02 with a Standard Deviation of 15.97 and a R-squared of 80.84. Its Sharpe Ratio is 1.06 while XLY’s Alpha is 6.96. Furthermore, the fund has a Treynor Ratio of 16.69 and a Mean Return of 1.47.

VTV’s Mean Return is 0.42 points lower than that of XLY and its R-squared is 11.77 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than XLY. The Alpha and Beta of VTV are 8.88 points lower and 0.04 points lower than XLY’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. XLY - Annual Returns

Year VTV XLY
2020 2.23% 29.66%
2019 25.85% 28.43%
2018 -5.39% 1.66%
2017 17.12% 22.77%
2016 16.88% 5.87%
2015 -0.89% 9.93%
2014 13.19% 9.49%
2013 33.03% 42.74%
2012 15.19% 23.6%
2011 1.16% 5.98%
2010 14.45% 27.36%

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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.

Portfolio Growth

VTV vs. XLY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $33,163 12.07%
XLY $10,000 $63,066 18.86%

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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.

VTV’s CAGR is 6.79 percentage points lower than that of XLY and as a result, would have yielded $29,903 less on a $10,000 investment. Thus, VTV performed worse than XLY by 6.79% annually.


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