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VXUS vs. XLY: What’s The Difference?

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

The expense ratio of VXUS is 0.04 percentage points lower than XLY’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 XLY over the past ten years.

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

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Summary

VXUSXLY
NameVanguard Total International Stock Index Fund ETF SharesConsumer Discretionary Select Sector SPDR Fund
CategoryForeign Large BlendConsumer Cyclical
IssuerVanguardSPDR State Street Global Advisors
AUM404.73B20.21B
Avg. Return8.41%18.86%
Div. Yield2.44%0.63%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

VXUS’s dividend yield is 1.81% higher than that of XLY (2.44% vs. 0.63%). Also, VXUS yielded on average 10.46% less per year over the past decade (8.41% vs. 18.86%). The expense ratio of VXUS is 0.04 percentage points lower than XLY’s (0.08% vs. 0.12%).

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Fund Composition

Industry Exposure

VXUS vs. XLY - Industry Exposure

VXUSXLY
Technology13.07%0.57%
Industrials12.94%0.0%
Energy4.55%0.0%
Communication Services7.06%0.0%
Utilities2.94%0.0%
Healthcare9.19%0.0%
Consumer Defensive7.83%5.34%
Real Estate3.79%0.0%
Financial Services17.64%0.0%
Consumer Cyclical12.64%94.1%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

VXUS is 17.64% more exposed to the Financial Services sector than XLY (17.64% vs 0.0%). VXUS’s exposure to Technology and Industrials stocks is 12.50% higher and 12.94% higher respectively (13.07% vs. 0.57% 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 XLY (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%.

XLY - Holdings

XLY HoldingsWeight
Amazon.com Inc22.9%
Tesla Inc13.5%
The Home Depot Inc8.74%
McDonald’s Corp4.5%
Nike Inc B4.45%
Lowe’s Companies Inc3.58%
Starbucks Corp3.44%
Target Corp3.12%
Booking Holdings Inc2.35%
TJX Companies Inc2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

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Risk Analysis

VXUSXLY
Mean Return0.561.47
R-squared98.3980.84
Std. Deviation15.1215.97
Alpha0.316.96
Beta0.991.02
Sharpe Ratio0.41.06
Treynor Ratio5.1416.69

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

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Mean Return of 1.47 with a R-squared of 80.84 and a Treynor Ratio of 16.69. Its Standard Deviation is 15.97 while XLY’s Alpha is 6.96. Furthermore, the fund has a Beta of 1.02 and a Sharpe Ratio of 1.06.

VXUS’s Mean Return is 0.91 points lower than that of XLY and its R-squared is 17.55 points higher. With a Standard Deviation of 15.12, VXUS is slightly less volatile than XLY. The Alpha and Beta of VXUS are 6.65 points lower and 0.03 points lower than XLY’s Alpha and Beta.

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Performance

Annual Returns

VXUS vs. XLY - Annual Returns

YearVXUSXLY
202011.32%29.66%
201921.58%28.43%
2018-14.42%1.66%
201727.52%22.77%
20164.72%5.87%
2015-4.28%9.93%
2014-4.17%9.49%
201315.16%42.74%
201218.22%23.6%
20110.0%5.98%
20100.0%27.36%

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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.

Portfolio Growth

VXUS vs. XLY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VXUS$10,000$19,3158.41%
XLY$10,000$46,72418.86%

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 XLY, the end total would have been $46,724. This equates to a $36,724 profit over 9 years and a compound annual growth rate (CAGR) of 18.86%.

VXUS’s CAGR is 10.46 percentage points lower than that of XLY and as a result, would have yielded $27,409 less on a $10,000 investment. Thus, VXUS performed worse than XLY by 10.46% annually.


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