The Vanguard Large-Cap Index Fund ETF Shares (VV) and the Industrial Select Sector SPDR Fund (XLI) are both among the Top 100 ETFs. VV is a Vanguard Large Blend fund and XLI is a SPDR State Street Global Advisors Industrials fund. So, what’s the difference between VV and XLI? And which fund is better?
The expense ratio of VV is 0.08 percentage points lower than XLI’s (0.04% vs. 0.12%). VV also has a higher exposure to the technology sector and a lower standard deviation. Overall, VV has provided higher returns than XLI over the past 11 years.
In this article, we’ll compare VV vs. XLI. We’ll look at performance and annual returns, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss VV’s and XLI’s holdings, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| VV | XLI | |
| Name | Vanguard Large-Cap Index Fund ETF Shares | Industrial Select Sector SPDR Fund |
| Category | Large Blend | Industrials |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 37.65B | 19.33B |
| Avg. Return | 14.75% | 14.44% |
| Div. Yield | 1.26% | 1.25% |
| Expense Ratio | 0.04% | 0.12% |
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 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%.
VV’s dividend yield is 0.01% higher than that of XLI (1.26% vs. 1.25%). Also, VV yielded on average 0.30% more per year over the past decade (14.75% vs. 14.44%). The expense ratio of VV is 0.08 percentage points lower than XLI’s (0.04% vs. 0.12%).
Fund Composition
Industry Exposure
| VV | XLI | |
| Technology | 25.38% | 1.82% |
| Industrials | 8.39% | 97.49% |
| Energy | 2.62% | 0.0% |
| Communication Services | 11.68% | 0.0% |
| Utilities | 2.35% | 0.0% |
| Healthcare | 13.22% | 0.0% |
| Consumer Defensive | 6.06% | 0.0% |
| Real Estate | 2.7% | 0.0% |
| Financial Services | 13.82% | 0.0% |
| Consumer Cyclical | 11.65% | 0.69% |
| Basic Materials | 2.13% | 0.0% |
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 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%.
VV is 23.56% more exposed to the Technology sector than XLI (25.38% vs 1.82%). 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 XLI (7.67% vs. 0.00%).
Holdings
| VV Holdings | Weight |
| Apple Inc | 5.7% |
| Microsoft Corp | 5.35% |
| Amazon.com Inc | 3.87% |
| Facebook Inc Class A | 2.19% |
| Alphabet Inc Class A | 1.93% |
| Alphabet Inc Class C | 1.81% |
| Tesla Inc | 1.37% |
| Berkshire Hathaway Inc Class B | 1.3% |
| NVIDIA Corp | 1.24% |
| 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%.
| XLI Holdings | Weight |
| Honeywell International Inc | 4.9% |
| United Parcel Service Inc Class B | 4.84% |
| Union Pacific Corp | 4.7% |
| Boeing Co | 4.24% |
| Raytheon Technologies Corp | 4.16% |
| Caterpillar Inc | 3.84% |
| General Electric Co | 3.8% |
| 3M Co | 3.7% |
| 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%.
Risk Analysis
| VV | XLI | |
| Mean Return | 1.24 | 1.14 |
| R-squared | 99.86 | 78.97 |
| Std. Deviation | 13.75 | 17.13 |
| Alpha | -0.08 | 2.38 |
| Beta | 1.01 | 1.08 |
| Sharpe Ratio | 1.04 | 0.76 |
| Treynor Ratio | 14.14 | 11.34 |
The Vanguard Large-Cap Index Fund ETF Shares (VV) has a R-squared of 99.86 with a Beta of 1.01 and a Sharpe Ratio of 1.04. Its Standard Deviation is 13.75 while VV’s Mean Return is 1.24. Furthermore, the fund has a Treynor Ratio of 14.14 and a Alpha of -0.08.
The Industrial Select Sector SPDR Fund (XLI) has a Alpha of 2.38 with a Sharpe Ratio of 0.76 and a R-squared of 78.97. Its Mean Return is 1.14 while XLI’s Standard Deviation is 17.13. Furthermore, the fund has a Beta of 1.08 and a Treynor Ratio of 11.34.
VV’s Mean Return is 0.10 points higher than that of XLI and its R-squared is 20.89 points higher. With a Standard Deviation of 13.75, VV is slightly less volatile than XLI. The Alpha and Beta of VV are 2.46 points lower and 0.07 points lower than XLI’s Alpha and Beta.
Performance
Annual Returns
| Year | VV | XLI |
| 2020 | 20.99% | 11.0% |
| 2019 | 31.39% | 29.11% |
| 2018 | -4.44% | -13.1% |
| 2017 | 22.03% | 23.85% |
| 2016 | 11.65% | 19.93% |
| 2015 | 1.07% | -4.27% |
| 2014 | 13.39% | 10.44% |
| 2013 | 32.65% | 40.44% |
| 2012 | 16.09% | 14.86% |
| 2011 | 1.58% | -1.01% |
| 2010 | 15.81% | 27.62% |
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 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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VV | $10,000 | $42,970 | 14.75% |
| XLI | $10,000 | $39,853 | 14.44% |
A $10,000 investment in VV would have resulted in a final balance of $42,970. This is a profit of $32,970 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.75%.
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%.
VV’s CAGR is 0.30 percentage points higher than that of XLI and as a result, would have yielded $3,117 more on a $10,000 investment. Thus, VV outperformed XLI by 0.30% annually.
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