XLF vs. SCHG: What’s The Difference?

The Financial Select Sector SPDR Fund (XLF) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between XLF and SCHG? And which fund is better?

The expense ratio of XLF is 0.08 percentage points higher than SCHG’s (0.12% vs. 0.04%). XLF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, XLF has provided lower returns than SCHG over the past ten years.

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

Summary

XLF SCHG
Name Financial Select Sector SPDR Fund Schwab U.S. Large-Cap Growth ETF
Category Financial Large Growth
Issuer SPDR State Street Global Advisors Schwab ETFs
AUM 40.81B 15.16B
Avg. Return 12.17% 17.81%
Div. Yield 1.57% 0.43%
Expense Ratio 0.12% 0.04%

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 Schwab U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

XLF’s dividend yield is 1.14% higher than that of SCHG (1.57% vs. 0.43%). Also, XLF yielded on average 5.64% less per year over the past decade (12.17% vs. 17.81%). The expense ratio of XLF is 0.08 percentage points higher than SCHG’s (0.12% vs. 0.04%).

Fund Composition

Industry Exposure

XLF vs. SCHG - Industry Exposure

XLF SCHG
Technology 0.0% 39.21%
Industrials 0.0% 3.01%
Energy 0.0% 0.2%
Communication Services 0.0% 17.07%
Utilities 0.0% 0.0%
Healthcare 0.0% 12.05%
Consumer Defensive 0.0% 2.15%
Real Estate 0.0% 1.64%
Financial Services 100.0% 7.98%
Consumer Cyclical 0.0% 15.01%
Basic Materials 0.0% 1.68%

The Financial Select Sector SPDR Fund (XLF) has the most exposure to the Financial Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLF’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The Schwab U.S. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

XLF is 92.02% more exposed to the Financial Services sector than SCHG (100.0% vs 7.98%). XLF’s exposure to Technology and Industrials stocks is 39.21% lower and 3.01% lower respectively (0.0% vs. 39.21% and 0.0% vs. 3.01%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 18.80% less of the fund’s holdings compared to SCHG (0.00% vs. 18.80%).

Holdings

XLF - 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%.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

Risk Analysis

XLF SCHG
Mean Return 1.21 1.46
R-squared 73.26 92.92
Std. Deviation 18.86 14.78
Alpha 2.63 1.97
Beta 1.15 1.05
Sharpe Ratio 0.74 1.14
Treynor Ratio 11.25 16.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Alpha of 1.97 with a Mean Return of 1.46 and a Beta of 1.05. Its Treynor Ratio is 16.3 while SCHG’s Standard Deviation is 14.78. Furthermore, the fund has a Sharpe Ratio of 1.14 and a R-squared of 92.92.

XLF’s Mean Return is 0.25 points lower than that of SCHG and its R-squared is 19.66 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than SCHG. The Alpha and Beta of XLF are 0.66 points higher and 0.10 points higher than SCHG’s Alpha and Beta.

Performance

Annual Returns

XLF vs. SCHG - Annual Returns

Year XLF SCHG
2020 -1.68% 39.13%
2019 31.88% 36.21%
2018 -13.09% -1.35%
2017 22.03% 28.04%
2016 22.55% 6.76%
2015 -1.6% 3.26%
2014 15.02% 15.74%
2013 35.37% 33.96%
2012 28.53% 17.02%
2011 -17.16% -0.67%
2010 11.97% 16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

XLF vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLF $10,000 $27,491 12.17%
SCHG $10,000 $47,556 17.81%

A $10,000 investment in XLF would have resulted in a final balance of $27,491. This is a profit of $17,491 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.17%.

With a $10,000 investment in SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.

XLF’s CAGR is 5.64 percentage points lower than that of SCHG and as a result, would have yielded $20,065 less on a $10,000 investment. Thus, XLF performed worse than SCHG by 5.64% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply