XLE vs. BIV: What’s The Difference?

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

The expense ratio of XLE is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%). XLE also has a high exposure to the energy sector while BIV is mostly comprised of AAA bonds. Overall, XLE has provided lower returns than BIV over the past 11 years.

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

Summary

XLE BIV
Name Energy Select Sector SPDR Fund Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Equity Energy Intermediate-Term Bond
Issuer SPDR State Street Global Advisors Vanguard
AUM 25.55B 39.05B
Avg. Return 1.28% 5.31%
Div. Yield 3.92% 2.06%
Expense Ratio 0.12% 0.05%

The Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% 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%.

XLE’s dividend yield is 1.86% higher than that of BIV (3.92% vs. 2.06%). Also, XLE yielded on average 4.03% less per year over the past decade (1.28% vs. 5.31%). The expense ratio of XLE is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%).

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Fund Composition

Holdings

XLE - Holdings

XLE Holdings Weight
Exxon Mobil Corp 23.7%
Chevron Corp 20.03%
ConocoPhillips 4.64%
EOG Resources Inc 4.46%
Schlumberger Ltd 4.43%
Marathon Petroleum Corp 4.17%
Pioneer Natural Resources Co 4.08%
Phillips 66 4.07%
Kinder Morgan Inc Class P 3.85%
Williams Companies Inc 3.5%

XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.

Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.

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.

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Risk Analysis

XLE BIV
Mean Return 0.32 0.35
R-squared 61.84 95.12
Std. Deviation 27.52 4.09
Alpha -11.98 -0.07
Beta 1.54 1.33
Sharpe Ratio 0.12 0.89
Treynor Ratio -0.4 2.72

The Energy Select Sector SPDR Fund (XLE) has a Sharpe Ratio of 0.12 with a Treynor Ratio of -0.4 and a R-squared of 61.84. Its Beta is 1.54 while XLE’s Alpha is -11.98. Furthermore, the fund has a Mean Return of 0.32 and a Standard Deviation of 27.52.

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

XLE’s Mean Return is 0.03 points lower than that of BIV and its R-squared is 33.28 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than BIV. The Alpha and Beta of XLE are 11.91 points lower and 0.21 points higher than BIV’s Alpha and Beta.

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Performance

Annual Returns

XLE vs. BIV - Annual Returns

Year XLE BIV
2020 -32.56% 9.71%
2019 11.87% 10.19%
2018 -18.1% -0.09%
2017 -1.01% 3.8%
2016 27.95% 2.86%
2015 -21.47% 1.23%
2014 -8.61% 7.0%
2013 26.16% -3.44%
2012 5.17% 7.02%
2011 2.98% 10.62%
2010 21.7% 9.55%

XLE had its best year in 2016 with an annual return of 27.95%. XLE’s worst year over the past decade yielded -32.56% and occurred in 2020. In most years the Energy Select Sector SPDR Fund provided moderate returns such as in 2017, 2011, and 2012 where annual returns amounted to -1.01%, 2.98%, and 5.17% 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

XLE vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLE $10,000 $9,339 1.28%
BIV $10,000 $17,492 5.31%

A $10,000 investment in XLE would have resulted in a final balance of $9,339. This is a profit of $-661 over 11 years and amounts to a compound annual growth rate (CAGR) of 1.28%.

With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.

XLE’s CAGR is 4.03 percentage points lower than that of BIV and as a result, would have yielded $8,153 less on a $10,000 investment. Thus, XLE performed worse than BIV by 4.03% annually.


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