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XLE vs. VV: What’s The Difference?

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.

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Summary

XLEVV
NameEnergy Select Sector SPDR FundVanguard Large-Cap Index Fund ETF Shares
CategoryEquity EnergyLarge Blend
IssuerSPDR State Street Global AdvisorsVanguard
AUM25.55B37.65B
Avg. Return1.28%14.75%
Div. Yield3.92%1.26%
Expense Ratio0.12%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%).

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Fund Composition

Industry Exposure

XLE vs. VV - Industry Exposure

XLEVV
Technology0.0%25.38%
Industrials0.0%8.39%
Energy100.0%2.62%
Communication Services0.0%11.68%
Utilities0.0%2.35%
Healthcare0.0%13.22%
Consumer Defensive0.0%6.06%
Real Estate0.0%2.7%
Financial Services0.0%13.82%
Consumer Cyclical0.0%11.65%
Basic Materials0.0%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

XLE HoldingsWeight
Exxon Mobil Corp23.7%
Chevron Corp20.03%
ConocoPhillips4.64%
EOG Resources Inc4.46%
Schlumberger Ltd4.43%
Marathon Petroleum Corp4.17%
Pioneer Natural Resources Co4.08%
Phillips 664.07%
Kinder Morgan Inc Class P3.85%
Williams Companies Inc3.5%

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

VV HoldingsWeight
Apple Inc5.7%
Microsoft Corp5.35%
Amazon.com Inc3.87%
Facebook Inc Class A2.19%
Alphabet Inc Class A1.93%
Alphabet Inc Class C1.81%
Tesla Inc1.37%
Berkshire Hathaway Inc Class B1.3%
NVIDIA Corp1.24%
JPMorgan Chase & Co1.24%

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%.

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Risk Analysis

XLEVV
Mean Return0.321.24
R-squared61.8499.86
Std. Deviation27.5213.75
Alpha-11.98-0.08
Beta1.541.01
Sharpe Ratio0.121.04
Treynor Ratio-0.414.14

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.

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Performance

Annual Returns

XLE vs. VV - Annual Returns

YearXLEVV
2020-32.56%20.99%
201911.87%31.39%
2018-18.1%-4.44%
2017-1.01%22.03%
201627.95%11.65%
2015-21.47%1.07%
2014-8.61%13.39%
201326.16%32.65%
20125.17%16.09%
20112.98%1.58%
201021.7%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

XLE vs. VV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLE$10,000$9,3391.28%
VV$10,000$42,97014.75%

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.


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