The Energy Select Sector SPDR Fund (XLE) and the Consumer Discretionary Select Sector SPDR Fund (XLY) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and XLY is a SPDR State Street Global Advisors Consumer Cyclical fund. So, what’s the difference between XLE and XLY? And which fund is better?
XLE and XLY have the same expense ratio: 0.12%. XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than XLY over the past 11 years.
In this article, we’ll compare XLE vs. XLY. We’ll look at industry exposure and portfolio growth, as well as at their annual returns and fund composition. Moreover, I’ll also discuss XLE’s and XLY’s performance, holdings, and risk metrics and examine how these affect their overall returns.
|Name||Energy Select Sector SPDR Fund||Consumer Discretionary Select Sector SPDR Fund|
|Category||Equity Energy||Consumer Cyclical|
|Issuer||SPDR State Street Global Advisors||SPDR State Street Global Advisors|
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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.
XLE’s dividend yield is 3.29% higher than that of XLY (3.92% vs. 0.63%). Also, XLE yielded on average 17.58% less per year over the past decade (1.28% vs. 18.86%). XLE and XLY have the same expense ratio: 0.12%.
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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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.
XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.
XLE is 100.00% more exposed to the Energy sector than XLY (100.0% vs 0.0%). XLE’s exposure to Technology and Industrials stocks is 0.57% lower and 0.00% lower respectively (0.0% vs. 0.57% and 0.0% vs. 0.0%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 94.10% less of the fund’s holdings compared to XLY (0.00% vs. 94.10%).
|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%.
|The Home Depot Inc||8.74%|
|Nike Inc B||4.45%|
|Lowe’s Companies Inc||3.58%|
|Booking Holdings Inc||2.35%|
|TJX Companies Inc||2.12%|
XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.
Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.
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The Energy Select Sector SPDR Fund (XLE) has a Mean Return of 0.32 with a Standard Deviation of 27.52 and a Sharpe Ratio of 0.12. Its Alpha is -11.98 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 Consumer Discretionary Select Sector SPDR Fund (XLY) has a Mean Return of 1.47 with a R-squared of 80.84 and a Beta of 1.02. Its Standard Deviation is 15.97 while XLY’s Sharpe Ratio is 1.06. Furthermore, the fund has a Treynor Ratio of 16.69 and a Alpha of 6.96.
XLE’s Mean Return is 1.15 points lower than that of XLY and its R-squared is 19.00 points lower. With a Standard Deviation of 27.52, XLE is slightly more volatile than XLY. The Alpha and Beta of XLE are 18.94 points lower and 0.52 points higher than XLY’s Alpha and Beta.
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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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% 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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.
XLE’s CAGR is 17.58 percentage points lower than that of XLY and as a result, would have yielded $53,727 less on a $10,000 investment. Thus, XLE performed worse than XLY by 17.58% annually.
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