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VXUS vs. XLV: What’s The Difference?

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between VXUS and XLV? And which fund is better?

The expense ratio of VXUS is 0.04 percentage points lower than XLV’s (0.08% vs. 0.12%). VXUS also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VXUS has provided lower returns than XLV over the past ten years.

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

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Summary

VXUSXLV
NameVanguard Total International Stock Index Fund ETF SharesHealth Care Select Sector SPDR Fund
CategoryForeign Large BlendHealth
IssuerVanguardSPDR State Street Global Advisors
AUM404.73B27.88B
Avg. Return8.41%15.02%
Div. Yield2.44%1.4%
Expense Ratio0.08%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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.

VXUS’s dividend yield is 1.04% higher than that of XLV (2.44% vs. 1.4%). Also, VXUS yielded on average 6.62% less per year over the past decade (8.41% vs. 15.02%). The expense ratio of VXUS is 0.04 percentage points lower than XLV’s (0.08% vs. 0.12%).

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Fund Composition

Industry Exposure

VXUS vs. XLV - Industry Exposure

VXUSXLV
Technology13.07%0.0%
Industrials12.94%0.0%
Energy4.55%0.0%
Communication Services7.06%0.0%
Utilities2.94%0.0%
Healthcare9.19%100.0%
Consumer Defensive7.83%0.0%
Real Estate3.79%0.0%
Financial Services17.64%0.0%
Consumer Cyclical12.64%0.0%
Basic Materials8.37%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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.

XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

VXUS is 17.64% more exposed to the Financial Services sector than XLV (17.64% vs 0.0%). 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 XLV (15.40% vs. 0.00%).

Holdings

VXUS - Holdings

VXUS HoldingsWeight
Taiwan Semiconductor Manufacturing Co Ltd1.62%
Tencent Holdings Ltd1.41%
Alibaba Group Holding Ltd Ordinary Shares1.26%
Nestle SA1.1%
Samsung Electronics Co Ltd1.05%
ASML Holding NV0.86%
Roche Holding AG0.81%
Toyota Motor Corp0.67%
LVMH Moet Hennessy Louis Vuitton SE0.61%
Novartis AG0.6%

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%.

XLV - Holdings

XLV HoldingsWeight
Johnson & Johnson9.19%
UnitedHealth Group Inc8.01%
Pfizer Inc4.64%
Abbott Laboratories4.36%
AbbVie Inc4.21%
Thermo Fisher Scientific Inc4.2%
Merck & Co Inc4.17%
Eli Lilly and Co3.87%
Danaher Corp3.61%
Medtronic PLC3.54%

XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.

Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.

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Risk Analysis

VXUSXLV
Mean Return0.561.27
R-squared98.3958.19
Std. Deviation15.1212.94
Alpha0.317.75
Beta0.990.7
Sharpe Ratio0.41.13
Treynor Ratio5.1421.1

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Sharpe Ratio of 0.4 with a Standard Deviation of 15.12 and a R-squared of 98.39. Its Mean Return is 0.56 while VXUS’s Beta is 0.99. Furthermore, the fund has a Alpha of 0.31 and a Treynor Ratio of 5.14.

The Health Care Select Sector SPDR Fund (XLV) has a Alpha of 7.75 with a Mean Return of 1.27 and a Treynor Ratio of 21.1. Its R-squared is 58.19 while XLV’s Beta is 0.7. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Standard Deviation of 12.94.

VXUS’s Mean Return is 0.71 points lower than that of XLV and its R-squared is 40.20 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than XLV. The Alpha and Beta of VXUS are 7.44 points lower and 0.29 points higher than XLV’s Alpha and Beta.

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Performance

Annual Returns

VXUS vs. XLV - Annual Returns

YearVXUSXLV
202011.32%13.33%
201921.58%20.63%
2018-14.42%6.3%
201727.52%21.7%
20164.72%-2.83%
2015-4.28%6.82%
2014-4.17%25.17%
201315.16%41.24%
201218.22%17.56%
20110.0%12.44%
20100.0%2.91%

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 XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% respectively.

Portfolio Growth

VXUS vs. XLV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VXUS$10,000$19,3158.41%
XLV$10,000$38,15215.02%

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 XLV, the end total would have been $38,152. This equates to a $28,152 profit over 9 years and a compound annual growth rate (CAGR) of 15.02%.

VXUS’s CAGR is 6.62 percentage points lower than that of XLV and as a result, would have yielded $18,837 less on a $10,000 investment. Thus, VXUS performed worse than XLV by 6.62% annually.


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