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 | 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 | 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 | 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
| 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
| 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.
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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
