The Energy Select Sector SPDR Fund (XLE) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and VBR is a Vanguard Small Value fund. So, what’s the difference between XLE and VBR? And which fund is better?
The expense ratio of XLE is 0.05 percentage points higher than VBR’s (0.12% vs. 0.07%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than VBR over the past 11 years.
In this article, we’ll compare XLE vs. VBR. We’ll look at industry exposure and fund composition, as well as at their risk metrics and performance. Moreover, I’ll also discuss XLE’s and VBR’s holdings, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Energy Select Sector SPDR Fund||Vanguard Small-Cap Value Index Fund ETF Shares|
|Category||Equity Energy||Small Value|
|Issuer||SPDR State Street Global Advisors||Vanguard|
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 Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.
XLE’s dividend yield is 2.32% higher than that of VBR (3.92% vs. 1.6%). Also, XLE yielded on average 11.00% less per year over the past decade (1.28% vs. 12.28%). The expense ratio of XLE is 0.05 percentage points higher than VBR’s (0.12% vs. 0.07%).
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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.
VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.
XLE is 94.85% more exposed to the Energy sector than VBR (100.0% vs 5.15%). XLE’s exposure to Technology and Industrials stocks is 8.39% lower and 18.44% lower respectively (0.0% vs. 8.39% and 0.0% vs. 18.44%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 44.78% less of the fund’s holdings compared to VBR (0.00% vs. 44.78%).
|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%.
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|Howmet Aerospace Inc||0.44%|
|Apollo Global Management Inc Class A||0.42%|
|Brown & Brown Inc||0.41%|
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
The Energy Select Sector SPDR Fund (XLE) has a Beta of 1.54 with a Alpha of -11.98 and a R-squared of 61.84. Its Standard Deviation is 27.52 while XLE’s Treynor Ratio is -0.4. Furthermore, the fund has a Sharpe Ratio of 0.12 and a Mean Return of 0.32.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a R-squared of 82.2 with a Beta of 1.23 and a Treynor Ratio of 9.15. Its Standard Deviation is 18.37 while VBR’s Mean Return is 1.08. Furthermore, the fund has a Alpha of -5.09 and a Sharpe Ratio of 0.67.
XLE’s Mean Return is 0.76 points lower than that of VBR and its R-squared is 20.36 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than VBR. The Alpha and Beta of XLE are 6.89 points lower and 0.31 points higher than VBR’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 2013 was the strongest year for VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.
XLE’s CAGR is 11.00 percentage points lower than that of VBR and as a result, would have yielded $23,272 less on a $10,000 investment. Thus, XLE performed worse than VBR by 11.00% annually.
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