The Vanguard Large-Cap Index Fund ETF Shares (VV) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VV is a Vanguard Large Blend fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VV and XLC? And which fund is better?
The expense ratio of VV is 0.08 percentage points lower than XLC’s (0.04% vs. 0.12%). VV also has a higher exposure to the technology sector and a higher standard deviation. Overall, VV has provided lower returns than XLC over the past 2 years.
In this article, we’ll compare VV vs. XLC. We’ll look at fund composition and performance, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss VV’s and XLC’s risk metrics, portfolio growth, and holdings and examine how these affect their overall returns.
|Name||Vanguard Large-Cap Index Fund ETF Shares||Communication Services Select Sector SPDR Fund|
|Issuer||Vanguard||SPDR State Street Global Advisors|
The Vanguard Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.
The Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
VV’s dividend yield is 0.64% higher than that of XLC (1.26% vs. 0.62%). Also, VV yielded on average 14.29% less per year over the past decade (14.75% vs. 29.04%). The expense ratio of VV is 0.08 percentage points lower than XLC’s (0.04% vs. 0.12%).
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The Vanguard Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.
VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.
The Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services 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.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VV is 25.38% more exposed to the Technology sector than XLC (25.38% vs 0.0%). VV’s exposure to Financial Services and Healthcare stocks is 13.82% higher and 13.22% higher respectively (13.82% vs. 0.0% and 13.22% vs. 0.0%). In total, Utilities, Energy, and Real Estate also make up 7.67% more of the fund’s holdings compared to XLC (7.67% vs. 0.00%).
|Facebook Inc Class A||2.19%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.81%|
|Berkshire Hathaway Inc Class B||1.3%|
|JPMorgan Chase & Co||1.24%|
VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.
Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.
|Facebook Inc A||23.75%|
|Alphabet Inc A||11.49%|
|Alphabet Inc Class C||11.16%|
|Charter Communications Inc A||4.65%|
|Comcast Corp Class A||4.44%|
|T-Mobile US Inc||4.41%|
|The Walt Disney Co||4.39%|
|Verizon Communications Inc||4.33%|
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
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The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Alpha of -0.08 with a Treynor Ratio of 14.14 and a R-squared of 99.86. Its Beta is 1.01 while VV’s Sharpe Ratio is 1.04. Furthermore, the fund has a Standard Deviation of 13.75 and a Mean Return of 1.24.
The Communication Services Select Sector SPDR Fund (XLC) has a Alpha of 0 with a Beta of 0 and a R-squared of 0. Its Standard Deviation is 0 while XLC’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.
VV’s Mean Return is 1.24 points higher than that of XLC and its R-squared is 99.86 points higher. With a Standard Deviation of 13.75, VV is slightly more volatile than XLC. The Alpha and Beta of VV are 0.08 points lower and 1.01 points higher than XLC’s Alpha and Beta.
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VV had its best year in 2013 with an annual return of 32.65%. VV’s worst year over the past decade yielded -4.44% and occurred in 2018. In most years the Vanguard Large-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.39%, 15.81%, and 16.09% respectively.
The year 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VV would have resulted in a final balance of $15,896. This is a profit of $5,896 over 2 years and amounts to a compound annual growth rate (CAGR) of 14.75%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
VV’s CAGR is 14.29 percentage points lower than that of XLC and as a result, would have yielded $749 less on a $10,000 investment. Thus, VV performed worse than XLC by 14.29% annually.
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