XLI vs. VOE: What’s The Difference?

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

The expense ratio of XLI is 0.05 percentage points higher than VOE’s (0.12% vs. 0.07%). XLI also has a higher exposure to the industrials sector and a higher standard deviation. Overall, XLI has provided higher returns than VOE over the past 11 years.

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

Summary

XLI VOE
Name Industrial Select Sector SPDR Fund Vanguard Mid-Cap Value Index Fund ETF Shares
Category Industrials Mid-Cap Value
Issuer SPDR State Street Global Advisors Vanguard
AUM 19.33B 26.78B
Avg. Return 14.44% 12.52%
Div. Yield 1.25% 1.87%
Expense Ratio 0.12% 0.07%

The Industrial Select Sector SPDR Fund (XLI) is a Industrials fund that is issued by SPDR State Street Global Advisors. It currently has 19.33B total assets under management and has yielded an average annual return of 14.44% over the past 10 years. The fund has a dividend yield of 1.25% 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%.

XLI’s dividend yield is 0.62% lower than that of VOE (1.25% vs. 1.87%). Also, XLI yielded on average 1.92% more per year over the past decade (14.44% vs. 12.52%). The expense ratio of XLI is 0.05 percentage points higher than VOE’s (0.12% vs. 0.07%).

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Fund Composition

Industry Exposure

XLI vs. VOE - Industry Exposure

XLI VOE
Technology 1.82% 9.85%
Industrials 97.49% 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 0.0% 18.26%
Consumer Cyclical 0.69% 11.8%
Basic Materials 0.0% 5.44%

The Industrial Select Sector SPDR Fund (XLI) has the most exposure to the Industrials sector at 97.49%. This is followed by Technology and Consumer Cyclical at 1.82% and 0.69% respectively. Financial Services (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLI’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Consumer Cyclical stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.69%.

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%.

XLI is 88.09% more exposed to the Industrials sector than VOE (97.49% vs 9.4%). XLI’s exposure to Technology and Consumer Cyclical stocks is 8.03% lower and 11.11% lower respectively (1.82% vs. 9.85% and 0.69% vs. 11.8%). In total, Financial Services, Real Estate, and Consumer Defensive also make up 34.59% less of the fund’s holdings compared to VOE (0.00% vs. 34.59%).

Holdings

XLI - Holdings

XLI Holdings Weight
Honeywell International Inc 4.9%
United Parcel Service Inc Class B 4.84%
Union Pacific Corp 4.7%
Boeing Co 4.24%
Raytheon Technologies Corp 4.16%
Caterpillar Inc 3.84%
General Electric Co 3.8%
3M Co 3.7%
Deere & Co 3.54%
Lockheed Martin Corp 2.98%

XLI’s Top Holdings are Honeywell International Inc, United Parcel Service Inc Class B, Union Pacific Corp, Boeing Co, and Raytheon Technologies Corp at 4.9%, 4.84%, 4.7%, 4.24%, and 4.16%.

Caterpillar Inc (3.84%), General Electric Co (3.8%), and 3M Co (3.7%) have a slightly smaller but still significant weight. Deere & Co and Lockheed Martin Corp are also represented in the XLI’s holdings at 3.54% and 2.98%.

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%.

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Risk Analysis

XLI VOE
Mean Return 1.14 1.05
R-squared 78.97 88.76
Std. Deviation 17.13 15.98
Alpha 2.38 -3.77
Beta 1.08 1.11
Sharpe Ratio 0.76 0.75
Treynor Ratio 11.34 10.19

The Industrial Select Sector SPDR Fund (XLI) has a Beta of 1.08 with a Sharpe Ratio of 0.76 and a Alpha of 2.38. Its Standard Deviation is 17.13 while XLI’s Mean Return is 1.14. Furthermore, the fund has a Treynor Ratio of 11.34 and a R-squared of 78.97.

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

XLI’s Mean Return is 0.09 points higher than that of VOE and its R-squared is 9.79 points lower. With a Standard Deviation of 17.13, XLI is slightly more volatile than VOE. The Alpha and Beta of XLI are 6.15 points higher and 0.03 points lower than VOE’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. VOE - Annual Returns

Year XLI VOE
2020 11.0% 2.5%
2019 29.11% 27.98%
2018 -13.1% -12.41%
2017 23.85% 17.05%
2016 19.93% 15.26%
2015 -4.27% -1.8%
2014 10.44% 13.98%
2013 40.44% 37.65%
2012 14.86% 16.04%
2011 -1.01% -0.32%
2010 27.62% 21.83%

XLI had its best year in 2013 with an annual return of 40.44%. XLI’s worst year over the past decade yielded -13.1% and occurred in 2018. In most years the Industrial Select Sector SPDR Fund provided moderate returns such as in 2020, 2012, and 2016 where annual returns amounted to 11.0%, 14.86%, and 19.93% 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

XLI vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLI $10,000 $39,853 14.44%
VOE $10,000 $33,655 12.52%

A $10,000 investment in XLI would have resulted in a final balance of $39,853. This is a profit of $29,853 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.44%.

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%.

XLI’s CAGR is 1.92 percentage points higher than that of VOE and as a result, would have yielded $6,198 more on a $10,000 investment. Thus, XLI outperformed VOE by 1.92% annually.


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