The Energy Select Sector SPDR Fund (XLE) and the Vanguard Large-Cap Index Fund ETF Shares (VV) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and VV is a Vanguard Large Blend fund. So, what’s the difference between XLE and VV? And which fund is better?
The expense ratio of XLE is 0.08 percentage points higher than VV’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 VV over the past 11 years.
In this article, we’ll compare XLE vs. VV. We’ll look at holdings and annual returns, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss XLE’s and VV’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.
Summary
| XLE | VV | |
| Name | Energy Select Sector SPDR Fund | Vanguard Large-Cap Index Fund ETF Shares |
| Category | Equity Energy | Large Blend |
| Issuer | SPDR State Street Global Advisors | Vanguard |
| AUM | 25.55B | 37.65B |
| Avg. Return | 1.28% | 14.75% |
| Div. Yield | 3.92% | 1.26% |
| Expense Ratio | 0.12% | 0.04% |
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 Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.
XLE’s dividend yield is 2.66% higher than that of VV (3.92% vs. 1.26%). Also, XLE yielded on average 13.47% less per year over the past decade (1.28% vs. 14.75%). The expense ratio of XLE is 0.08 percentage points higher than VV’s (0.12% vs. 0.04%).
Fund Composition
Industry Exposure
| XLE | VV | |
| Technology | 0.0% | 25.38% |
| Industrials | 0.0% | 8.39% |
| Energy | 100.0% | 2.62% |
| Communication Services | 0.0% | 11.68% |
| Utilities | 0.0% | 2.35% |
| Healthcare | 0.0% | 13.22% |
| Consumer Defensive | 0.0% | 6.06% |
| Real Estate | 0.0% | 2.7% |
| Financial Services | 0.0% | 13.82% |
| Consumer Cyclical | 0.0% | 11.65% |
| Basic Materials | 0.0% | 2.13% |
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 Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.
VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.
XLE is 97.38% more exposed to the Energy sector than VV (100.0% vs 2.62%). XLE’s exposure to Technology and Industrials stocks is 25.38% lower and 8.39% lower respectively (0.0% vs. 25.38% and 0.0% vs. 8.39%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 28.17% less of the fund’s holdings compared to VV (0.00% vs. 28.17%).
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%.
| VV Holdings | Weight |
| Apple Inc | 5.7% |
| Microsoft Corp | 5.35% |
| Amazon.com Inc | 3.87% |
| Facebook Inc Class A | 2.19% |
| Alphabet Inc Class A | 1.93% |
| Alphabet Inc Class C | 1.81% |
| Tesla Inc | 1.37% |
| Berkshire Hathaway Inc Class B | 1.3% |
| NVIDIA Corp | 1.24% |
| JPMorgan Chase & Co | 1.24% |
VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.
Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.
Risk Analysis
| XLE | VV | |
| Mean Return | 0.32 | 1.24 |
| R-squared | 61.84 | 99.86 |
| Std. Deviation | 27.52 | 13.75 |
| Alpha | -11.98 | -0.08 |
| Beta | 1.54 | 1.01 |
| Sharpe Ratio | 0.12 | 1.04 |
| Treynor Ratio | -0.4 | 14.14 |
The Energy Select Sector SPDR Fund (XLE) has a Sharpe Ratio of 0.12 with a Mean Return of 0.32 and a Alpha of -11.98. Its Standard Deviation is 27.52 while XLE’s Beta is 1.54. Furthermore, the fund has a R-squared of 61.84 and a Treynor Ratio of -0.4.
The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Mean Return of 1.24 with a Standard Deviation of 13.75 and a Beta of 1.01. Its Alpha is -0.08 while VV’s R-squared is 99.86. Furthermore, the fund has a Treynor Ratio of 14.14 and a Sharpe Ratio of 1.04.
XLE’s Mean Return is 0.92 points lower than that of VV and its R-squared is 38.02 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than VV. The Alpha and Beta of XLE are 11.90 points lower and 0.53 points higher than VV’s Alpha and Beta.
Performance
Annual Returns
| Year | XLE | VV |
| 2020 | -32.56% | 20.99% |
| 2019 | 11.87% | 31.39% |
| 2018 | -18.1% | -4.44% |
| 2017 | -1.01% | 22.03% |
| 2016 | 27.95% | 11.65% |
| 2015 | -21.47% | 1.07% |
| 2014 | -8.61% | 13.39% |
| 2013 | 26.16% | 32.65% |
| 2012 | 5.17% | 16.09% |
| 2011 | 2.98% | 1.58% |
| 2010 | 21.7% | 15.81% |
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 VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLE | $10,000 | $9,339 | 1.28% |
| VV | $10,000 | $42,970 | 14.75% |
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 VV, the end total would have been $42,970. This equates to a $32,970 profit over 11 years and a compound annual growth rate (CAGR) of 14.75%.
XLE’s CAGR is 13.47 percentage points lower than that of VV and as a result, would have yielded $33,631 less on a $10,000 investment. Thus, XLE performed worse than VV by 13.47% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
