The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the Technology Select Sector SPDR Fund (XLK) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and XLK is a SPDR State Street Global Advisors Technology fund. So, what’s the difference between VXUS and XLK? And which fund is better?
The expense ratio of VXUS is 0.04 percentage points lower than XLK’s (0.08% vs. 0.12%). VXUS also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VXUS has provided lower returns than XLK over the past ten years.
In this article, we’ll compare VXUS vs. XLK. We’ll look at risk metrics and industry exposure, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss VXUS’s and XLK’s holdings, performance, and annual returns and examine how these affect their overall returns.
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Summary
| VXUS | XLK | |
| Name | Vanguard Total International Stock Index Fund ETF Shares | Technology Select Sector SPDR Fund |
| Category | Foreign Large Blend | Technology |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 404.73B | 42.3B |
| Avg. Return | 8.41% | 20.02% |
| Div. Yield | 2.44% | 0.73% |
| 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 Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% with an expense ratio of 0.12%.
VXUS’s dividend yield is 1.71% higher than that of XLK (2.44% vs. 0.73%). Also, VXUS yielded on average 11.62% less per year over the past decade (8.41% vs. 20.02%). The expense ratio of VXUS is 0.04 percentage points lower than XLK’s (0.08% vs. 0.12%).
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Fund Composition
Industry Exposure
| VXUS | XLK | |
| Technology | 13.07% | 87.54% |
| Industrials | 12.94% | 1.75% |
| 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% | 10.71% |
| 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 Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 87.54%. This is followed by Financial Services and Industrials at 10.71% and 1.75% 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.
XLK’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 1.75%.
VXUS is 6.93% more exposed to the Financial Services sector than XLK (17.64% vs 10.71%). VXUS’s exposure to Technology and Industrials stocks is 74.47% lower and 11.19% higher respectively (13.07% vs. 87.54% and 12.94% vs. 1.75%). In total, Real Estate, Energy, and Communication Services also make up 15.40% more of the fund’s holdings compared to XLK (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%.
| XLK Holdings | Weight |
| Apple Inc | 21.45% |
| Microsoft Corp | 20.37% |
| NVIDIA Corp | 4.98% |
| Visa Inc Class A | 3.95% |
| PayPal Holdings Inc | 3.42% |
| Mastercard Inc A | 3.19% |
| Adobe Inc | 2.8% |
| Salesforce.com Inc | 2.26% |
| Intel Corp | 2.26% |
| Cisco Systems Inc | 2.23% |
XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.
Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.
Risk Analysis
| VXUS | XLK | |
| Mean Return | 0.56 | 1.7 |
| R-squared | 98.39 | 73.56 |
| Std. Deviation | 15.12 | 15.58 |
| Alpha | 0.31 | 10.43 |
| Beta | 0.99 | 0.95 |
| Sharpe Ratio | 0.4 | 1.27 |
| Treynor Ratio | 5.14 | 21.44 |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a R-squared of 98.39 with a Standard Deviation of 15.12 and a Mean Return of 0.56. Its Sharpe Ratio is 0.4 while VXUS’s Treynor Ratio is 5.14. Furthermore, the fund has a Beta of 0.99 and a Alpha of 0.31.
The Technology Select Sector SPDR Fund (XLK) has a Alpha of 10.43 with a Standard Deviation of 15.58 and a Mean Return of 1.7. Its Beta is 0.95 while XLK’s Sharpe Ratio is 1.27. Furthermore, the fund has a R-squared of 73.56 and a Treynor Ratio of 21.44.
VXUS’s Mean Return is 1.14 points lower than that of XLK and its R-squared is 24.83 points higher. With a Standard Deviation of 15.12, VXUS is slightly less volatile than XLK. The Alpha and Beta of VXUS are 10.12 points lower and 0.04 points higher than XLK’s Alpha and Beta.
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Performance
Annual Returns
| Year | VXUS | XLK |
| 2020 | 11.32% | 43.67% |
| 2019 | 21.58% | 49.97% |
| 2018 | -14.42% | -1.56% |
| 2017 | 27.52% | 34.27% |
| 2016 | 4.72% | 14.81% |
| 2015 | -4.28% | 5.62% |
| 2014 | -4.17% | 17.75% |
| 2013 | 15.16% | 25.98% |
| 2012 | 18.22% | 15.47% |
| 2011 | 0.0% | 2.69% |
| 2010 | 0.0% | 11.6% |
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 2019 was the strongest year for XLK, returning 49.97% on an annual basis. The poorest year for XLK in the last ten years was 2018, with a yield of -1.56%. Most years the Technology Select Sector SPDR Fund has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 14.81%, 15.47%, and 17.75% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VXUS | $10,000 | $19,315 | 8.41% |
| XLK | $10,000 | $59,153 | 20.02% |
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 XLK, the end total would have been $59,153. This equates to a $49,153 profit over 9 years and a compound annual growth rate (CAGR) of 20.02%.
VXUS’s CAGR is 11.62 percentage points lower than that of XLK and as a result, would have yielded $39,838 less on a $10,000 investment. Thus, VXUS performed worse than XLK by 11.62% annually.
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