XLC vs. BIV: What’s The Difference?

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

The expense ratio of XLC is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%). XLC also has a high exposure to the communication services sector while BIV is mostly comprised of AAA bonds. Overall, XLC has provided higher returns than BIV over the past 2 years.

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

Summary

XLC BIV
Name Communication Services Select Sector SPDR Fund Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Communications Intermediate-Term Bond
Issuer SPDR State Street Global Advisors Vanguard
AUM 14.09B 39.05B
Avg. Return 29.04% 5.31%
Div. Yield 0.62% 2.06%
Expense Ratio 0.12% 0.05%

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%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

XLC’s dividend yield is 1.44% lower than that of BIV (0.62% vs. 2.06%). Also, XLC yielded on average 23.72% more per year over the past decade (29.04% vs. 5.31%). The expense ratio of XLC is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%).

Fund Composition

Holdings

XLC - Holdings

XLC Holdings Weight
Facebook Inc A 23.75%
Alphabet Inc A 11.49%
Alphabet Inc Class C 11.16%
Netflix Inc 4.78%
Charter Communications Inc A 4.65%
Comcast Corp Class A 4.44%
T-Mobile US Inc 4.41%
The Walt Disney Co 4.39%
AT&T Inc 4.35%
Verizon Communications Inc 4.33%

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%.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

Risk Analysis

XLC BIV
Mean Return 0 0.35
R-squared 0 95.12
Std. Deviation 0 4.09
Alpha 0 -0.07
Beta 0 1.33
Sharpe Ratio 0 0.89
Treynor Ratio 0 2.72

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

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Alpha of -0.07 with a Mean Return of 0.35 and a Sharpe Ratio of 0.89. Its R-squared is 95.12 while BIV’s Treynor Ratio is 2.72. Furthermore, the fund has a Beta of 1.33 and a Standard Deviation of 4.09.

XLC’s Mean Return is 0.35 points lower than that of BIV and its R-squared is 95.12 points lower. With a Standard Deviation of 0, XLC is slightly less volatile than BIV. The Alpha and Beta of XLC are 0.07 points higher and 1.33 points lower than BIV’s Alpha and Beta.

Performance

Annual Returns

XLC vs. BIV - Annual Returns

Year XLC BIV
2020 26.85% 9.71%
2019 31.22% 10.19%
2018 0.0% -0.09%
2017 0.0% 3.8%
2016 0.0% 2.86%
2015 0.0% 1.23%
2014 0.0% 7.0%
2013 0.0% -3.44%
2012 0.0% 7.02%
2011 0.0% 10.62%
2010 0.0% 9.55%

XLC had its best year in 2019 with an annual return of 31.22%. XLC’s worst year over the past decade yielded 0.0% and occurred in 2018. In most years the Communication Services Select Sector SPDR Fund provided moderate returns such as in 2014, 2013, and 2012 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.

The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

XLC vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLC $10,000 $16,645 29.04%
BIV $10,000 $12,088 5.31%

A $10,000 investment in XLC would have resulted in a final balance of $16,645. This is a profit of $6,645 over 2 years and amounts to a compound annual growth rate (CAGR) of 29.04%.

With a $10,000 investment in BIV, the end total would have been $12,088. This equates to a $2,088 profit over 2 years and a compound annual growth rate (CAGR) of 5.31%.

XLC’s CAGR is 23.72 percentage points higher than that of BIV and as a result, would have yielded $4,557 more on a $10,000 investment. Thus, XLC outperformed BIV by 23.72% annually.


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