The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the Financial Select Sector SPDR Fund (XLF) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and XLF is a SPDR State Street Global Advisors Financial fund. So, what’s the difference between VXUS and XLF? And which fund is better?
The expense ratio of VXUS is 0.04 percentage points lower than XLF’s (0.08% vs. 0.12%). VXUS also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VXUS has provided lower returns than XLF over the past ten years.
In this article, we’ll compare VXUS vs. XLF. We’ll look at risk metrics and holdings, as well as at their performance and fund composition. Moreover, I’ll also discuss VXUS’s and XLF’s annual returns, portfolio growth, and industry exposure and examine how these affect their overall returns.
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Summary
| VXUS | XLF | |
| Name | Vanguard Total International Stock Index Fund ETF Shares | Financial Select Sector SPDR Fund |
| Category | Foreign Large Blend | Financial |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 404.73B | 40.81B |
| Avg. Return | 8.41% | 12.17% |
| Div. Yield | 2.44% | 1.57% |
| Expense Ratio | 0.08% | 0.12% |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
The Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.
VXUS’s dividend yield is 0.87% higher than that of XLF (2.44% vs. 1.57%). Also, VXUS yielded on average 3.76% less per year over the past decade (8.41% vs. 12.17%). The expense ratio of VXUS is 0.04 percentage points lower than XLF’s (0.08% vs. 0.12%).
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Fund Composition
Industry Exposure
| VXUS | XLF | |
| Technology | 13.07% | 0.0% |
| Industrials | 12.94% | 0.0% |
| Energy | 4.55% | 0.0% |
| Communication Services | 7.06% | 0.0% |
| Utilities | 2.94% | 0.0% |
| Healthcare | 9.19% | 0.0% |
| Consumer Defensive | 7.83% | 0.0% |
| Real Estate | 3.79% | 0.0% |
| Financial Services | 17.64% | 100.0% |
| Consumer Cyclical | 12.64% | 0.0% |
| Basic Materials | 8.37% | 0.0% |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has the most exposure to the Financial Services sector at 17.64%. This is followed by Technology and Industrials at 13.07% and 12.94% respectively. Real Estate (3.79%), Energy (4.55%), and Communication Services (7.06%) only make up 15.40% of the fund’s total assets.
VXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 7.83%, 8.37%, 9.19%, 12.64%, and 12.94%.
The Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
XLF’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VXUS is 82.36% less exposed to the Financial Services sector than XLF (17.64% vs 100.0%). VXUS’s exposure to Technology and Industrials stocks is 13.07% higher and 12.94% higher respectively (13.07% vs. 0.0% and 12.94% vs. 0.0%). In total, Real Estate, Energy, and Communication Services also make up 15.40% more of the fund’s holdings compared to XLF (15.40% vs. 0.00%).
Holdings
| VXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.62% |
| Tencent Holdings Ltd | 1.41% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.26% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.05% |
| ASML Holding NV | 0.86% |
| Roche Holding AG | 0.81% |
| Toyota Motor Corp | 0.67% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.61% |
| Novartis AG | 0.6% |
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
| XLF Holdings | Weight |
| Berkshire Hathaway Inc Class B | 12.83% |
| JPMorgan Chase & Co | 11.47% |
| Bank of America Corp | 7.57% |
| Wells Fargo & Co | 4.56% |
| Citigroup Inc | 3.56% |
| Morgan Stanley | 3.32% |
| Goldman Sachs Group Inc | 3.15% |
| BlackRock Inc | 3.02% |
| Charles Schwab Corp | 2.66% |
| American Express Co | 2.62% |
XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.
Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.
Risk Analysis
| VXUS | XLF | |
| Mean Return | 0.56 | 1.21 |
| R-squared | 98.39 | 73.26 |
| Std. Deviation | 15.12 | 18.86 |
| Alpha | 0.31 | 2.63 |
| Beta | 0.99 | 1.15 |
| Sharpe Ratio | 0.4 | 0.74 |
| Treynor Ratio | 5.14 | 11.25 |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a R-squared of 98.39 with a Mean Return of 0.56 and a Treynor Ratio of 5.14. Its Alpha is 0.31 while VXUS’s Standard Deviation is 15.12. Furthermore, the fund has a Beta of 0.99 and a Sharpe Ratio of 0.4.
The Financial Select Sector SPDR Fund (XLF) has a Standard Deviation of 18.86 with a Beta of 1.15 and a Mean Return of 1.21. Its Alpha is 2.63 while XLF’s R-squared is 73.26. Furthermore, the fund has a Treynor Ratio of 11.25 and a Sharpe Ratio of 0.74.
VXUS’s Mean Return is 0.65 points lower than that of XLF and its R-squared is 25.13 points higher. With a Standard Deviation of 15.12, VXUS is slightly less volatile than XLF. The Alpha and Beta of VXUS are 2.32 points lower and 0.16 points lower than XLF’s Alpha and Beta.
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Performance
Annual Returns
| Year | VXUS | XLF |
| 2020 | 11.32% | -1.68% |
| 2019 | 21.58% | 31.88% |
| 2018 | -14.42% | -13.09% |
| 2017 | 27.52% | 22.03% |
| 2016 | 4.72% | 22.55% |
| 2015 | -4.28% | -1.6% |
| 2014 | -4.17% | 15.02% |
| 2013 | 15.16% | 35.37% |
| 2012 | 18.22% | 28.53% |
| 2011 | 0.0% | -17.16% |
| 2010 | 0.0% | 11.97% |
VXUS had its best year in 2017 with an annual return of 27.52%. VXUS’s worst year over the past decade yielded -14.42% and occurred in 2018. In most years the Vanguard Total International Stock Index Fund ETF Shares provided moderate returns such as in 2010, 2016, and 2020 where annual returns amounted to 0.0%, 4.72%, and 11.32% respectively.
The year 2013 was the strongest year for XLF, returning 35.37% on an annual basis. The poorest year for XLF in the last ten years was 2011, with a yield of -17.16%. Most years the Financial Select Sector SPDR Fund has given investors modest returns, such as in 2010, 2014, and 2017, when gains were 11.97%, 15.02%, and 22.03% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VXUS | $10,000 | $19,315 | 8.41% |
| XLF | $10,000 | $33,186 | 12.17% |
A $10,000 investment in VXUS would have resulted in a final balance of $19,315. This is a profit of $9,315 over 9 years and amounts to a compound annual growth rate (CAGR) of 8.41%.
With a $10,000 investment in XLF, the end total would have been $33,186. This equates to a $23,186 profit over 9 years and a compound annual growth rate (CAGR) of 12.17%.
VXUS’s CAGR is 3.76 percentage points lower than that of XLF and as a result, would have yielded $13,871 less on a $10,000 investment. Thus, VXUS performed worse than XLF by 3.76% annually.
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