The Financial Select Sector SPDR Fund (XLF) and the Vanguard Total International Bond Index Fund ETF Shares (BNDX) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and BNDX is a Vanguard N/A fund. So, what’s the difference between XLF and BNDX? And which fund is better?
The expense ratio of XLF is 0.04 percentage points higher than BNDX’s (0.12% vs. 0.08%). XLF also has a high exposure to the financial services sector while BNDX is mostly comprised of A bonds. Overall, XLF has provided higher returns than BNDX over the past ten years.
In this article, we’ll compare XLF vs. BNDX. We’ll look at holdings and risk metrics, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss XLF’s and BNDX’s industry exposure, performance, and annual returns and examine how these affect their overall returns.
Summary
| XLF | BNDX | |
| Name | Financial Select Sector SPDR Fund | Vanguard Total International Bond Index Fund ETF Shares |
| Category | Financial | N/A |
| Issuer | SPDR State Street Global Advisors | Vanguard |
| AUM | 40.81B | 116.41B |
| Avg. Return | 12.17% | 4.63% |
| Div. Yield | 1.57% | 0.94% |
| Expense Ratio | 0.12% | 0.08% |
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 Total International Bond Index Fund ETF Shares (BNDX) is a N/A fund that is issued by Vanguard. It currently has 116.41B total assets under management and has yielded an average annual return of 4.63% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.08%.
XLF’s dividend yield is 0.63% higher than that of BNDX (1.57% vs. 0.94%). Also, XLF yielded on average 7.54% more per year over the past decade (12.17% vs. 4.63%). The expense ratio of XLF is 0.04 percentage points higher than BNDX’s (0.12% vs. 0.08%).
Fund Composition
Holdings
| XLF Holdings | Weight |
| Berkshire Hathaway Inc Class B | 12.83% |
| JPMorgan Chase & Co | 11.47% |
| Bank of America Corp | 7.57% |
| Wells Fargo & Co | 4.56% |
| Citigroup Inc | 3.56% |
| Morgan Stanley | 3.32% |
| Goldman Sachs Group Inc | 3.15% |
| BlackRock Inc | 3.02% |
| Charles Schwab Corp | 2.66% |
| American Express Co | 2.62% |
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%.
| BNDX Bond Sectors | Weight |
| A | 29.19% |
| AA | 26.79% |
| AAA | 21.59% |
| BBB | 19.41% |
| Others | 1.57% |
| Below B | 1.45% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BNDX’s Top Bond Sectors are ratings of A, AA, AAA, BBB, and Others at 29.19%, 26.79%, 21.59%, 19.41%, and 1.57%. The fund is less weighted towards Below B (1.45%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| XLF | BNDX | |
| Mean Return | 1.21 | 0 |
| R-squared | 73.26 | 0 |
| Std. Deviation | 18.86 | 0 |
| Alpha | 2.63 | 0 |
| Beta | 1.15 | 0 |
| Sharpe Ratio | 0.74 | 0 |
| Treynor Ratio | 11.25 | 0 |
The Financial Select Sector SPDR Fund (XLF) has a R-squared of 73.26 with a Alpha of 2.63 and a Standard Deviation of 18.86. Its Sharpe Ratio is 0.74 while XLF’s Beta is 1.15. Furthermore, the fund has a Treynor Ratio of 11.25 and a Mean Return of 1.21.
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Sharpe Ratio of 0 with a Mean Return of 0 and a Beta of 0. Its Alpha is 0 while BNDX’s R-squared is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.
XLF’s Mean Return is 1.21 points higher than that of BNDX and its R-squared is 73.26 points higher. With a Standard Deviation of 18.86, XLF is slightly more volatile than BNDX. The Alpha and Beta of XLF are 2.63 points higher and 1.15 points higher than BNDX’s Alpha and Beta.
Performance
Annual Returns
| Year | XLF | BNDX |
| 2020 | -1.68% | 4.6% |
| 2019 | 31.88% | 7.88% |
| 2018 | -13.09% | 2.94% |
| 2017 | 22.03% | 2.4% |
| 2016 | 22.55% | 4.67% |
| 2015 | -1.6% | 1.08% |
| 2014 | 15.02% | 8.83% |
| 2013 | 35.37% | 0.0% |
| 2012 | 28.53% | 0.0% |
| 2011 | -17.16% | 0.0% |
| 2010 | 11.97% | 0.0% |
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 2014 was the strongest year for BNDX, returning 8.83% on an annual basis. The poorest year for BNDX in the last ten years was 2013, with a yield of 0.0%. Most years the Vanguard Total International Bond Index Fund ETF Shares has given investors modest returns, such as in 2015, 2017, and 2018, when gains were 1.08%, 2.4%, and 2.94% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLF | $10,000 | $19,073 | 12.17% |
| BNDX | $10,000 | $13,695 | 4.63% |
A $10,000 investment in XLF would have resulted in a final balance of $19,073. This is a profit of $9,073 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.17%.
With a $10,000 investment in BNDX, the end total would have been $13,695. This equates to a $3,695 profit over 7 years and a compound annual growth rate (CAGR) of 4.63%.
XLF’s CAGR is 7.54 percentage points higher than that of BNDX and as a result, would have yielded $5,378 more on a $10,000 investment. Thus, XLF outperformed BNDX by 7.54% annually.
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