XLE vs. VT: What’s The Difference?

The Energy Select Sector SPDR Fund (XLE) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and VT is a Vanguard N/A fund. So, what’s the difference between XLE and VT? And which fund is better?

The expense ratio of XLE is 0.04 percentage points higher than VT’s (0.12% vs. 0.08%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than VT over the past 11 years.

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

Summary

XLE VT
Name Energy Select Sector SPDR Fund Vanguard Total World Stock Index Fund ETF Shares
Category Equity Energy N/A
Issuer SPDR State Street Global Advisors Vanguard
AUM 25.55B 30.44B
Avg. Return 1.28% 10.42%
Div. Yield 3.92% 1.65%
Expense Ratio 0.12% 0.08%

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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

XLE’s dividend yield is 2.27% higher than that of VT (3.92% vs. 1.65%). Also, XLE yielded on average 9.14% less per year over the past decade (1.28% vs. 10.42%). The expense ratio of XLE is 0.04 percentage points higher than VT’s (0.12% vs. 0.08%).

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Fund Composition

Industry Exposure

XLE vs. VT - Industry Exposure

XLE VT
Technology 0.0% 19.63%
Industrials 0.0% 10.7%
Energy 100.0% 3.48%
Communication Services 0.0% 9.02%
Utilities 0.0% 2.6%
Healthcare 0.0% 11.58%
Consumer Defensive 0.0% 6.71%
Real Estate 0.0% 3.64%
Financial Services 0.0% 15.36%
Consumer Cyclical 0.0% 12.32%
Basic Materials 0.0% 4.97%

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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

XLE is 96.52% more exposed to the Energy sector than VT (100.0% vs 3.48%). XLE’s exposure to Technology and Industrials stocks is 19.63% lower and 10.70% lower respectively (0.0% vs. 19.63% and 0.0% vs. 10.7%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 31.32% less of the fund’s holdings compared to VT (0.00% vs. 31.32%).

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%.

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

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Risk Analysis

XLE VT
Mean Return 0.32 0.9
R-squared 61.84 99.35
Std. Deviation 27.52 14.19
Alpha -11.98 0.2
Beta 1.54 1.01
Sharpe Ratio 0.12 0.71
Treynor Ratio -0.4 9.5

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 Sharpe Ratio is 0.12. Furthermore, the fund has a Mean Return of 0.32 and a Treynor Ratio of -0.4.

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Sharpe Ratio of 0.71 with a Beta of 1.01 and a Mean Return of 0.9. Its R-squared is 99.35 while VT’s Treynor Ratio is 9.5. Furthermore, the fund has a Alpha of 0.2 and a Standard Deviation of 14.19.

XLE’s Mean Return is 0.58 points lower than that of VT and its R-squared is 37.51 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than VT. The Alpha and Beta of XLE are 12.18 points lower and 0.53 points higher than VT’s Alpha and Beta.

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Performance

Annual Returns

XLE vs. VT - Annual Returns

Year XLE VT
2020 -32.56% 16.74%
2019 11.87% 26.8%
2018 -18.1% -9.67%
2017 -1.01% 24.19%
2016 27.95% 8.77%
2015 -21.47% -1.88%
2014 -8.61% 3.97%
2013 26.16% 22.98%
2012 5.17% 17.33%
2011 2.98% -7.71%
2010 21.7% 13.05%

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 2019 was the strongest year for VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

XLE vs. VT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLE $10,000 $9,339 1.28%
VT $10,000 $27,739 10.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

XLE’s CAGR is 9.14 percentage points lower than that of VT and as a result, would have yielded $18,400 less on a $10,000 investment. Thus, XLE performed worse than VT by 9.14% annually.


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