The Energy Select Sector SPDR Fund (XLE) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between XLE and SCHG? And which fund is better?
The expense ratio of XLE is 0.08 percentage points higher than SCHG’s (0.12% vs. 0.04%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than SCHG over the past 10 years.
In this article, we’ll compare XLE vs. SCHG. We’ll look at risk metrics and portfolio growth, as well as at their performance and fund composition. Moreover, I’ll also discuss XLE’s and SCHG’s annual returns, holdings, and industry exposure and examine how these affect their overall returns.
|Name||Energy Select Sector SPDR Fund||Schwab U.S. Large-Cap Growth ETF|
|Category||Equity Energy||Large Growth|
|Issuer||SPDR State Street Global Advisors||Schwab ETFs|
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 Schwab U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
XLE’s dividend yield is 3.49% higher than that of SCHG (3.92% vs. 0.43%). Also, XLE yielded on average 16.53% less per year over the past decade (1.28% vs. 17.81%). The expense ratio of XLE is 0.08 percentage points higher than SCHG’s (0.12% vs. 0.04%).
The Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.
XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.
SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.
XLE is 99.80% more exposed to the Energy sector than SCHG (100.0% vs 0.2%). XLE’s exposure to Technology and Industrials stocks is 39.21% lower and 3.01% lower respectively (0.0% vs. 39.21% and 0.0% vs. 3.01%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 24.63% less of the fund’s holdings compared to SCHG (0.00% vs. 24.63%).
|Exxon Mobil Corp||23.7%|
|EOG Resources Inc||4.46%|
|Marathon Petroleum Corp||4.17%|
|Pioneer Natural Resources Co||4.08%|
|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%.
|Facebook Inc A||4.45%|
|Alphabet Inc A||3.93%|
|Alphabet Inc Class C||3.82%|
|Visa Inc Class A||2.12%|
|UnitedHealth Group Inc||2.02%|
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
The Energy Select Sector SPDR Fund (XLE) has a Mean Return of 0.32 with a Sharpe Ratio of 0.12 and a Treynor Ratio of -0.4. Its Beta is 1.54 while XLE’s Standard Deviation is 27.52. Furthermore, the fund has a Alpha of -11.98 and a R-squared of 61.84.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Beta of 1.05 with a Treynor Ratio of 16.3 and a Standard Deviation of 14.78. Its Sharpe Ratio is 1.14 while SCHG’s R-squared is 92.92. Furthermore, the fund has a Alpha of 1.97 and a Mean Return of 1.46.
XLE’s Mean Return is 1.14 points lower than that of SCHG and its R-squared is 31.08 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than SCHG. The Alpha and Beta of XLE are 13.95 points lower and 0.49 points higher than SCHG’s Alpha and Beta.
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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in XLE would have resulted in a final balance of $7,674. This is a profit of $-2,326 over 10 years and amounts to a compound annual growth rate (CAGR) of 1.28%.
With a $10,000 investment in SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.
XLE’s CAGR is 16.53 percentage points lower than that of SCHG and as a result, would have yielded $39,882 less on a $10,000 investment. Thus, XLE performed worse than SCHG by 16.53% annually.
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