The Financial Select Sector SPDR Fund (XLF) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between XLF and BIV? And which fund is better?

The expense ratio of XLF is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%). XLF also has a high exposure to the financial services sector while BIV is mostly comprised of AAA bonds. Overall, XLF has provided higher returns than BIV over the past ten years.

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

Summary

XLFBIV
NameFinancial Select Sector SPDR FundVanguard Intermediate-Term Bond Index Fund ETF Shares
CategoryFinancialIntermediate-Term Bond
IssuerSPDR State Street Global AdvisorsVanguard
AUM40.81B39.05B
Avg. Return12.17%5.31%
Div. Yield1.57%2.06%
Expense Ratio0.12%0.05%

The Financial Select Sector SPDR Fund (XLF) is a Financial fund that is issued by SPDR State Street Global Advisors. It currently has 40.81B total assets under management and has yielded an average annual return of 12.17% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.12%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

XLF’s dividend yield is 0.49% lower than that of BIV (1.57% vs. 2.06%). Also, XLF yielded on average 6.85% more per year over the past decade (12.17% vs. 5.31%). The expense ratio of XLF is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%).

Fund Composition

Holdings

XLF - Holdings

XLF HoldingsWeight
Berkshire Hathaway Inc Class B12.83%
JPMorgan Chase & Co11.47%
Bank of America Corp7.57%
Wells Fargo & Co4.56%
Citigroup Inc3.56%
Morgan Stanley3.32%
Goldman Sachs Group Inc3.15%
BlackRock Inc3.02%
Charles Schwab Corp2.66%
American Express Co2.62%

XLF’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, and Citigroup Inc at 12.83%, 11.47%, 7.57%, 4.56%, and 3.56%.

Morgan Stanley (3.32%), Goldman Sachs Group Inc (3.15%), and BlackRock Inc (3.02%) have a slightly smaller but still significant weight. Charles Schwab Corp and American Express Co are also represented in the XLF’s holdings at 2.66% and 2.62%.

BIV - Holdings

BIV Bond SectorsWeight
AAA54.51%
BBB25.24%
A16.97%
AA3.1%
Others0.15%
Below B0.03%
B0.0%
BB0.0%
US Government0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

Risk Analysis

XLFBIV
Mean Return1.210.35
R-squared73.2695.12
Std. Deviation18.864.09
Alpha2.63-0.07
Beta1.151.33
Sharpe Ratio0.740.89
Treynor Ratio11.252.72

The Financial Select Sector SPDR Fund (XLF) has a Sharpe Ratio of 0.74 with a R-squared of 73.26 and a Alpha of 2.63. Its Treynor Ratio is 11.25 while XLF’s Standard Deviation is 18.86. Furthermore, the fund has a Mean Return of 1.21 and a Beta of 1.15.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Standard Deviation of 4.09 with a Alpha of -0.07 and a R-squared of 95.12. Its Mean Return is 0.35 while BIV’s Beta is 1.33. Furthermore, the fund has a Sharpe Ratio of 0.89 and a Treynor Ratio of 2.72.

XLF’s Mean Return is 0.86 points higher than that of BIV and its R-squared is 21.86 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than BIV. The Alpha and Beta of XLF are 2.70 points higher and 0.18 points lower than BIV’s Alpha and Beta.

Performance

Annual Returns

XLF vs. BIV - Annual Returns

YearXLFBIV
2020-1.68%9.71%
201931.88%10.19%
2018-13.09%-0.09%
201722.03%3.8%
201622.55%2.86%
2015-1.6%1.23%
201415.02%7.0%
201335.37%-3.44%
201228.53%7.02%
2011-17.16%10.62%
201011.97%9.55%

XLF had its best year in 2013 with an annual return of 35.37%. XLF’s worst year over the past decade yielded -17.16% and occurred in 2011. In most years the Financial Select Sector SPDR Fund provided moderate returns such as in 2010, 2014, and 2017 where annual returns amounted to 11.97%, 15.02%, and 22.03% respectively.

The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

XLF vs. BIV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLF$10,000$30,78212.17%
BIV$10,000$17,4925.31%

A $10,000 investment in XLF would have resulted in a final balance of $30,782. This is a profit of $20,782 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.17%.

With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.

XLF’s CAGR is 6.85 percentage points higher than that of BIV and as a result, would have yielded $13,290 more on a $10,000 investment. Thus, XLF outperformed BIV by 6.85% annually.

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