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XLI vs. VXF: What’s The Difference?

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

The expense ratio of XLI is 0.06 percentage points higher than VXF’s (0.12% vs. 0.06%). XLI also has a higher exposure to the industrials sector and a lower standard deviation. Overall, XLI has provided lower returns than VXF over the past 11 years.

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

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Summary

XLIVXF
NameIndustrial Select Sector SPDR FundVanguard Extended Market Index Fund ETF Shares
CategoryIndustrialsMid-Cap Growth
IssuerSPDR State Street Global AdvisorsVanguard
AUM19.33B114.53B
Avg. Return14.44%15.47%
Div. Yield1.25%1.19%
Expense Ratio0.12%0.06%

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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

XLI’s dividend yield is 0.06% higher than that of VXF (1.25% vs. 1.19%). Also, XLI yielded on average 1.03% less per year over the past decade (14.44% vs. 15.47%). The expense ratio of XLI is 0.06 percentage points higher than VXF’s (0.12% vs. 0.06%).

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Fund Composition

Industry Exposure

XLI vs. VXF - Industry Exposure

XLIVXF
Technology1.82%23.61%
Industrials97.49%11.31%
Energy0.0%2.46%
Communication Services0.0%7.29%
Utilities0.0%1.65%
Healthcare0.0%15.25%
Consumer Defensive0.0%3.09%
Real Estate0.0%8.16%
Financial Services0.0%12.56%
Consumer Cyclical0.69%11.35%
Basic Materials0.0%3.26%

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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.

VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.

XLI is 86.18% more exposed to the Industrials sector than VXF (97.49% vs 11.31%). XLI’s exposure to Technology and Consumer Cyclical stocks is 21.79% lower and 10.66% lower respectively (1.82% vs. 23.61% and 0.69% vs. 11.35%). In total, Financial Services, Real Estate, and Consumer Defensive also make up 23.81% less of the fund’s holdings compared to VXF (0.00% vs. 23.81%).

Holdings

XLI - Holdings

XLI HoldingsWeight
Honeywell International Inc4.9%
United Parcel Service Inc Class B4.84%
Union Pacific Corp4.7%
Boeing Co4.24%
Raytheon Technologies Corp4.16%
Caterpillar Inc3.84%
General Electric Co3.8%
3M Co3.7%
Deere & Co3.54%
Lockheed Martin Corp2.98%

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%.

VXF - Holdings

VXF HoldingsWeight
Square Inc A1.2%
Zoom Video Communications Inc1.04%
Uber Technologies Inc0.93%
Moderna Inc0.9%
Blackstone Group Inc0.83%
Snap Inc Class A0.8%
Twilio Inc A0.73%
DocuSign Inc0.68%
CrowdStrike Holdings Inc Class A0.63%
Marvell Technology Inc0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

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Risk Analysis

XLIVXF
Mean Return1.141.24
R-squared78.9785.73
Std. Deviation17.1318.04
Alpha2.38-3.26
Beta1.081.23
Sharpe Ratio0.760.79
Treynor Ratio11.3410.92

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

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a Alpha of -3.26 and a R-squared of 85.73. Its Standard Deviation is 18.04 while VXF’s Sharpe Ratio is 0.79. Furthermore, the fund has a Mean Return of 1.24 and a Beta of 1.23.

XLI’s Mean Return is 0.10 points lower than that of VXF and its R-squared is 6.76 points lower. With a Standard Deviation of 17.13, XLI is slightly less volatile than VXF. The Alpha and Beta of XLI are 5.64 points higher and 0.15 points lower than VXF’s Alpha and Beta.

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Performance

Annual Returns

XLI vs. VXF - Annual Returns

YearXLIVXF
202011.0%32.19%
201929.11%28.04%
2018-13.1%-9.37%
201723.85%18.1%
201619.93%16.16%
2015-4.27%-3.26%
201410.44%7.55%
201340.44%38.37%
201214.86%18.48%
2011-1.01%-3.61%
201027.62%27.55%

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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.

Portfolio Growth

XLI vs. VXF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLI$10,000$39,85314.44%
VXF$10,000$44,13015.47%

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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.

XLI’s CAGR is 1.03 percentage points lower than that of VXF and as a result, would have yielded $4,277 less on a $10,000 investment. Thus, XLI performed worse than VXF by 1.03% annually.


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