The Energy Select Sector SPDR Fund (XLE) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between XLE and VXF? And which fund is better?
The expense ratio of XLE is 0.06 percentage points higher than VXF’s (0.12% vs. 0.06%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than VXF over the past 11 years.
In this article, we’ll compare XLE vs. VXF. We’ll look at holdings and fund composition, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss XLE’s and VXF’s industry exposure, annual returns, and performance and examine how these affect their overall returns.
Summary
| XLE | VXF | |
| Name | Energy Select Sector SPDR Fund | Vanguard Extended Market Index Fund ETF Shares |
| Category | Equity Energy | Mid-Cap Growth |
| Issuer | SPDR State Street Global Advisors | Vanguard |
| AUM | 25.55B | 114.53B |
| Avg. Return | 1.28% | 15.47% |
| Div. Yield | 3.92% | 1.19% |
| Expense Ratio | 0.12% | 0.06% |
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
XLE’s dividend yield is 2.73% higher than that of VXF (3.92% vs. 1.19%). Also, XLE yielded on average 14.19% less per year over the past decade (1.28% vs. 15.47%). The expense ratio of XLE is 0.06 percentage points higher than VXF’s (0.12% vs. 0.06%).
Fund Composition
Industry Exposure
| XLE | VXF | |
| Technology | 0.0% | 23.61% |
| Industrials | 0.0% | 11.31% |
| Energy | 100.0% | 2.46% |
| Communication Services | 0.0% | 7.29% |
| Utilities | 0.0% | 1.65% |
| Healthcare | 0.0% | 15.25% |
| Consumer Defensive | 0.0% | 3.09% |
| Real Estate | 0.0% | 8.16% |
| Financial Services | 0.0% | 12.56% |
| Consumer Cyclical | 0.0% | 11.35% |
| Basic Materials | 0.0% | 3.26% |
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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
XLE is 97.54% more exposed to the Energy sector than VXF (100.0% vs 2.46%). XLE’s exposure to Technology and Industrials stocks is 23.61% lower and 11.31% lower respectively (0.0% vs. 23.61% and 0.0% vs. 11.31%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 32.07% less of the fund’s holdings compared to VXF (0.00% vs. 32.07%).
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%.
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
Risk Analysis
| XLE | VXF | |
| Mean Return | 0.32 | 1.24 |
| R-squared | 61.84 | 85.73 |
| Std. Deviation | 27.52 | 18.04 |
| Alpha | -11.98 | -3.26 |
| Beta | 1.54 | 1.23 |
| Sharpe Ratio | 0.12 | 0.79 |
| Treynor Ratio | -0.4 | 10.92 |
The Energy Select Sector SPDR Fund (XLE) has a Standard Deviation of 27.52 with a R-squared of 61.84 and a Treynor Ratio of -0.4. Its Mean Return is 0.32 while XLE’s Beta is 1.54. Furthermore, the fund has a Sharpe Ratio of 0.12 and a Alpha of -11.98.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Sharpe Ratio of 0.79 with a Standard Deviation of 18.04 and a R-squared of 85.73. Its Treynor Ratio is 10.92 while VXF’s Alpha is -3.26. Furthermore, the fund has a Beta of 1.23 and a Mean Return of 1.24.
XLE’s Mean Return is 0.92 points lower than that of VXF and its R-squared is 23.89 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than VXF. The Alpha and Beta of XLE are 8.72 points lower and 0.31 points higher than VXF’s Alpha and Beta.
Performance
Annual Returns
| Year | XLE | VXF |
| 2020 | -32.56% | 32.19% |
| 2019 | 11.87% | 28.04% |
| 2018 | -18.1% | -9.37% |
| 2017 | -1.01% | 18.1% |
| 2016 | 27.95% | 16.16% |
| 2015 | -21.47% | -3.26% |
| 2014 | -8.61% | 7.55% |
| 2013 | 26.16% | 38.37% |
| 2012 | 5.17% | 18.48% |
| 2011 | 2.98% | -3.61% |
| 2010 | 21.7% | 27.55% |
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLE | $10,000 | $9,339 | 1.28% |
| VXF | $10,000 | $44,130 | 15.47% |
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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
XLE’s CAGR is 14.19 percentage points lower than that of VXF and as a result, would have yielded $34,791 less on a $10,000 investment. Thus, XLE performed worse than VXF by 14.19% annually.
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