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VXF vs. XLC: What’s The Difference?

The Vanguard Extended Market Index Fund ETF Shares (VXF) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. VXF is a Vanguard Mid-Cap Growth fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between VXF and XLC? And which fund is better?

The expense ratio of VXF is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%). VXF also has a higher exposure to the technology sector and a higher standard deviation. Overall, VXF has provided lower returns than XLC over the past 2 years.

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

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Summary

VXFXLC
NameVanguard Extended Market Index Fund ETF SharesCommunication Services Select Sector SPDR Fund
CategoryMid-Cap GrowthCommunications
IssuerVanguardSPDR State Street Global Advisors
AUM114.53B14.09B
Avg. Return15.47%29.04%
Div. Yield1.19%0.62%
Expense Ratio0.06%0.12%

The Vanguard Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

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%.

VXF’s dividend yield is 0.57% higher than that of XLC (1.19% vs. 0.62%). Also, VXF yielded on average 13.56% less per year over the past decade (15.47% vs. 29.04%). The expense ratio of VXF is 0.06 percentage points lower than XLC’s (0.06% vs. 0.12%).

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Fund Composition

Industry Exposure

VXF vs. XLC - Industry Exposure

VXFXLC
Technology23.61%0.0%
Industrials11.31%0.0%
Energy2.46%0.0%
Communication Services7.29%100.0%
Utilities1.65%0.0%
Healthcare15.25%0.0%
Consumer Defensive3.09%0.0%
Real Estate8.16%0.0%
Financial Services12.56%0.0%
Consumer Cyclical11.35%0.0%
Basic Materials3.26%0.0%

The Vanguard Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.

VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.

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%.

VXF is 23.61% more exposed to the Technology sector than XLC (23.61% vs 0.0%). VXF’s exposure to Healthcare and Financial Services stocks is 15.25% higher and 12.56% higher respectively (15.25% vs. 0.0% and 12.56% vs. 0.0%). In total, Energy, Consumer Defensive, and Basic Materials also make up 8.81% more of the fund’s holdings compared to XLC (8.81% vs. 0.00%).

Holdings

VXF - Holdings

VXF HoldingsWeight
Square Inc A1.2%
Zoom Video Communications Inc1.04%
Uber Technologies Inc0.93%
Moderna Inc0.9%
Blackstone Group Inc0.83%
Snap Inc Class A0.8%
Twilio Inc A0.73%
DocuSign Inc0.68%
CrowdStrike Holdings Inc Class A0.63%
Marvell Technology Inc0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

XLC - Holdings

XLC HoldingsWeight
Facebook Inc A23.75%
Alphabet Inc A11.49%
Alphabet Inc Class C11.16%
Netflix Inc4.78%
Charter Communications Inc A4.65%
Comcast Corp Class A4.44%
T-Mobile US Inc4.41%
The Walt Disney Co4.39%
AT&T Inc4.35%
Verizon Communications Inc4.33%

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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Risk Analysis

VXFXLC
Mean Return1.240
R-squared85.730
Std. Deviation18.040
Alpha-3.260
Beta1.230
Sharpe Ratio0.790
Treynor Ratio10.920

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a R-squared of 85.73 and a Sharpe Ratio of 0.79. Its Beta is 1.23 while VXF’s Standard Deviation is 18.04. Furthermore, the fund has a Mean Return of 1.24 and a Alpha of -3.26.

The Communication Services Select Sector SPDR Fund (XLC) has a Standard Deviation of 0 with a Treynor Ratio of 0 and a Beta of 0. Its R-squared is 0 while XLC’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.

VXF’s Mean Return is 1.24 points higher than that of XLC and its R-squared is 85.73 points higher. With a Standard Deviation of 18.04, VXF is slightly more volatile than XLC. The Alpha and Beta of VXF are 3.26 points lower and 1.23 points higher than XLC’s Alpha and Beta.

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Performance

Annual Returns

VXF vs. XLC - Annual Returns

YearVXFXLC
202032.19%26.85%
201928.04%31.22%
2018-9.37%0.0%
201718.1%0.0%
201616.16%0.0%
2015-3.26%0.0%
20147.55%0.0%
201338.37%0.0%
201218.48%0.0%
2011-3.61%0.0%
201027.55%0.0%

VXF had its best year in 2013 with an annual return of 38.37%. VXF’s worst year over the past decade yielded -9.37% and occurred in 2018. In most years the Vanguard Extended Market Index Fund ETF Shares provided moderate returns such as in 2016, 2017, and 2012 where annual returns amounted to 16.16%, 18.1%, and 18.48% 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.

Portfolio Growth

VXF vs. XLC - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VXF$10,000$16,92515.47%
XLC$10,000$16,64529.04%

A $10,000 investment in VXF would have resulted in a final balance of $16,925. This is a profit of $6,925 over 2 years and amounts to a compound annual growth rate (CAGR) of 15.47%.

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%.

VXF’s CAGR is 13.56 percentage points lower than that of XLC and as a result, would have yielded $280 more on a $10,000 investment. Thus, VXF performed worse than XLC by 13.56% annually.


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