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XLF vs. SCHX: What’s The Difference?

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

The expense ratio of XLF is 0.09 percentage points higher than SCHX’s (0.12% vs. 0.03%). XLF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, XLF has provided lower returns than SCHX over the past ten years.

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

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Summary

XLFSCHX
NameFinancial Select Sector SPDR FundSchwab U.S. Large-Cap ETF
CategoryFinancialLarge Blend
IssuerSPDR State Street Global AdvisorsSchwab ETFs
AUM40.81B30.89B
Avg. Return12.17%14.60%
Div. Yield1.57%1.41%
Expense Ratio0.12%0.03%

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 ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.

XLF’s dividend yield is 0.16% higher than that of SCHX (1.57% vs. 1.41%). Also, XLF yielded on average 2.44% less per year over the past decade (12.17% vs. 14.60%). The expense ratio of XLF is 0.09 percentage points higher than SCHX’s (0.12% vs. 0.03%).

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Fund Composition

Industry Exposure

XLF vs. SCHX - Industry Exposure

XLFSCHX
Technology0.0%25.13%
Industrials0.0%8.65%
Energy0.0%2.72%
Communication Services0.0%11.26%
Utilities0.0%2.37%
Healthcare0.0%13.04%
Consumer Defensive0.0%5.97%
Real Estate0.0%3.13%
Financial Services100.0%13.82%
Consumer Cyclical0.0%11.63%
Basic Materials0.0%2.28%

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 ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.

SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.

XLF is 86.18% more exposed to the Financial Services sector than SCHX (100.0% vs 13.82%). XLF’s exposure to Technology and Industrials stocks is 25.13% lower and 8.65% lower respectively (0.0% vs. 25.13% and 0.0% vs. 8.65%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.73% less of the fund’s holdings compared to SCHX (0.00% vs. 20.73%).

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%.

SCHX - Holdings

SCHX HoldingsWeight
Apple Inc5.37%
Microsoft Corp5.1%
Amazon.com Inc3.69%
Facebook Inc A2.08%
Alphabet Inc A1.84%
Alphabet Inc Class C1.78%
Berkshire Hathaway Inc Class B1.32%
Tesla Inc1.31%
NVIDIA Corp1.25%
JPMorgan Chase & Co1.18%

SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.

Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.

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Risk Analysis

XLFSCHX
Mean Return1.211.24
R-squared73.2699.83
Std. Deviation18.8613.8
Alpha2.63-0.14
Beta1.151.02
Sharpe Ratio0.741.03
Treynor Ratio11.2514.06

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

The Schwab U.S. Large-Cap ETF (SCHX) has a R-squared of 99.83 with a Mean Return of 1.24 and a Standard Deviation of 13.8. Its Alpha is -0.14 while SCHX’s Sharpe Ratio is 1.03. Furthermore, the fund has a Beta of 1.02 and a Treynor Ratio of 14.06.

XLF’s Mean Return is 0.03 points lower than that of SCHX and its R-squared is 26.57 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than SCHX. The Alpha and Beta of XLF are 2.77 points higher and 0.13 points higher than SCHX’s Alpha and Beta.

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Performance

Annual Returns

XLF vs. SCHX - Annual Returns

YearXLFSCHX
2020-1.68%20.9%
201931.88%31.4%
2018-13.09%-4.52%
201722.03%21.91%
201622.55%11.78%
2015-1.6%1.02%
201415.02%13.33%
201335.37%32.54%
201228.53%16.06%
2011-17.16%1.61%
201011.97%15.88%

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 2013 was the strongest year for SCHX, returning 32.54% on an annual basis. The poorest year for SCHX in the last ten years was 2018, with a yield of -4.52%. Most years the Schwab U.S. Large-Cap ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.33%, 15.88%, and 16.06% respectively.

Portfolio Growth

XLF vs. SCHX - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLF$10,000$27,49112.17%
SCHX$10,000$36,98714.60%

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 SCHX, the end total would have been $36,987. This equates to a $26,987 profit over 10 years and a compound annual growth rate (CAGR) of 14.60%.

XLF’s CAGR is 2.44 percentage points lower than that of SCHX and as a result, would have yielded $9,496 less on a $10,000 investment. Thus, XLF performed worse than SCHX by 2.44% annually.


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