XLF vs. VT: What’s The Difference?

The Financial Select Sector SPDR Fund (XLF) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. XLF is a SPDR State Street Global Advisors Financial fund and VT is a Vanguard N/A fund. So, what’s the difference between XLF and VT? And which fund is better?

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

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

Summary

XLF VT
Name Financial Select Sector SPDR Fund Vanguard Total World Stock Index Fund ETF Shares
Category Financial N/A
Issuer SPDR State Street Global Advisors Vanguard
AUM 40.81B 30.44B
Avg. Return 12.17% 10.42%
Div. Yield 1.57% 1.65%
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 World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

XLF’s dividend yield is 0.08% lower than that of VT (1.57% vs. 1.65%). Also, XLF yielded on average 1.75% more per year over the past decade (12.17% vs. 10.42%). The expense ratio of XLF is 0.04 percentage points higher than VT’s (0.12% vs. 0.08%).

Fund Composition

Industry Exposure

XLF vs. VT - Industry Exposure

XLF VT
Technology 0.0% 19.63%
Industrials 0.0% 10.7%
Energy 0.0% 3.48%
Communication Services 0.0% 9.02%
Utilities 0.0% 2.6%
Healthcare 0.0% 11.58%
Consumer Defensive 0.0% 6.71%
Real Estate 0.0% 3.64%
Financial Services 100.0% 15.36%
Consumer Cyclical 0.0% 12.32%
Basic Materials 0.0% 4.97%

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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

XLF is 84.64% more exposed to the Financial Services sector than VT (100.0% vs 15.36%). XLF’s exposure to Technology and Industrials stocks is 19.63% lower and 10.70% lower respectively (0.0% vs. 19.63% and 0.0% vs. 10.7%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 22.67% less of the fund’s holdings compared to VT (0.00% vs. 22.67%).

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%.

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

Risk Analysis

XLF VT
Mean Return 1.21 0.9
R-squared 73.26 99.35
Std. Deviation 18.86 14.19
Alpha 2.63 0.2
Beta 1.15 1.01
Sharpe Ratio 0.74 0.71
Treynor Ratio 11.25 9.5

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

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a R-squared of 99.35 with a Standard Deviation of 14.19 and a Mean Return of 0.9. Its Alpha is 0.2 while VT’s Beta is 1.01. Furthermore, the fund has a Treynor Ratio of 9.5 and a Sharpe Ratio of 0.71.

XLF’s Mean Return is 0.31 points higher than that of VT and its R-squared is 26.09 points lower. With a Standard Deviation of 18.86, XLF is slightly more volatile than VT. The Alpha and Beta of XLF are 2.43 points higher and 0.14 points higher than VT’s Alpha and Beta.

Performance

Annual Returns

XLF vs. VT - Annual Returns

Year XLF VT
2020 -1.68% 16.74%
2019 31.88% 26.8%
2018 -13.09% -9.67%
2017 22.03% 24.19%
2016 22.55% 8.77%
2015 -1.6% -1.88%
2014 15.02% 3.97%
2013 35.37% 22.98%
2012 28.53% 17.33%
2011 -17.16% -7.71%
2010 11.97% 13.05%

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 2019 was the strongest year for VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

XLF vs. VT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLF $10,000 $30,782 12.17%
VT $10,000 $27,739 10.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

XLF’s CAGR is 1.75 percentage points higher than that of VT and as a result, would have yielded $3,043 more on a $10,000 investment. Thus, XLF outperformed VT by 1.75% annually.


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