XLF vs. VOE: What’s The Difference?

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

The expense ratio of XLF is 0.05 percentage points higher than VOE’s (0.12% vs. 0.07%). XLF also has a higher exposure to the financial services sector and a higher standard deviation. Overall, XLF has provided lower returns than VOE over the past ten years.

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

Summary

XLF VOE
Name Financial Select Sector SPDR Fund Vanguard Mid-Cap Value Index Fund ETF Shares
Category Financial Mid-Cap Value
Issuer SPDR State Street Global Advisors Vanguard
AUM 40.81B 26.78B
Avg. Return 12.17% 12.52%
Div. Yield 1.57% 1.87%
Expense Ratio 0.12% 0.07%

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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

XLF’s dividend yield is 0.30% lower than that of VOE (1.57% vs. 1.87%). Also, XLF yielded on average 0.36% less per year over the past decade (12.17% vs. 12.52%). The expense ratio of XLF is 0.05 percentage points higher than VOE’s (0.12% vs. 0.07%).

Fund Composition

Industry Exposure

XLF vs. VOE - Industry Exposure

XLF VOE
Technology 0.0% 9.85%
Industrials 0.0% 9.4%
Energy 0.0% 5.69%
Communication Services 0.0% 5.27%
Utilities 0.0% 10.93%
Healthcare 0.0% 7.04%
Consumer Defensive 0.0% 4.85%
Real Estate 0.0% 11.48%
Financial Services 100.0% 18.26%
Consumer Cyclical 0.0% 11.8%
Basic Materials 0.0% 5.44%

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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

XLF is 81.74% more exposed to the Financial Services sector than VOE (100.0% vs 18.26%). XLF’s exposure to Technology and Industrials stocks is 9.85% lower and 9.40% lower respectively (0.0% vs. 9.85% and 0.0% vs. 9.4%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 28.13% less of the fund’s holdings compared to VOE (0.00% vs. 28.13%).

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%.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

Risk Analysis

XLF VOE
Mean Return 1.21 1.05
R-squared 73.26 88.76
Std. Deviation 18.86 15.98
Alpha 2.63 -3.77
Beta 1.15 1.11
Sharpe Ratio 0.74 0.75
Treynor Ratio 11.25 10.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Standard Deviation of 15.98 with a Beta of 1.11 and a R-squared of 88.76. Its Sharpe Ratio is 0.75 while VOE’s Alpha is -3.77. Furthermore, the fund has a Mean Return of 1.05 and a Treynor Ratio of 10.19.

XLF’s Mean Return is 0.16 points higher than that of VOE and its R-squared is 15.50 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than VOE. The Alpha and Beta of XLF are 6.40 points higher and 0.04 points higher than VOE’s Alpha and Beta.

Performance

Annual Returns

XLF vs. VOE - Annual Returns

Year XLF VOE
2020 -1.68% 2.5%
2019 31.88% 27.98%
2018 -13.09% -12.41%
2017 22.03% 17.05%
2016 22.55% 15.26%
2015 -1.6% -1.8%
2014 15.02% 13.98%
2013 35.37% 37.65%
2012 28.53% 16.04%
2011 -17.16% -0.32%
2010 11.97% 21.83%

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 2013 was the strongest year for VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

XLF vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLF $10,000 $30,782 12.17%
VOE $10,000 $33,655 12.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

XLF’s CAGR is 0.36 percentage points lower than that of VOE and as a result, would have yielded $2,873 less on a $10,000 investment. Thus, XLF performed worse than VOE by 0.36% annually.


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