The Technology Select Sector SPDR Fund (XLK) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between XLK and BIV? And which fund is better?
The expense ratio of XLK is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%). XLK also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, XLK has provided higher returns than BIV over the past ten years.
In this article, we’ll compare XLK vs. BIV. We’ll look at fund composition and risk metrics, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss XLK’s and BIV’s performance, industry exposure, and holdings and examine how these affect their overall returns.
|Name||Technology Select Sector SPDR Fund||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Issuer||SPDR State Street Global Advisors||Vanguard|
The Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% with an expense ratio of 0.12%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
XLK’s dividend yield is 1.33% lower than that of BIV (0.73% vs. 2.06%). Also, XLK yielded on average 14.71% more per year over the past decade (20.02% vs. 5.31%). The expense ratio of XLK is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%).
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|Visa Inc Class A||3.95%|
|PayPal Holdings Inc||3.42%|
|Mastercard Inc A||3.19%|
|Cisco Systems Inc||2.23%|
XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.
Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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The Technology Select Sector SPDR Fund (XLK) has a R-squared of 73.56 with a Treynor Ratio of 21.44 and a Mean Return of 1.7. Its Beta is 0.95 while XLK’s Sharpe Ratio is 1.27. Furthermore, the fund has a Alpha of 10.43 and a Standard Deviation of 15.58.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Treynor Ratio of 2.72 with a Sharpe Ratio of 0.89 and a Mean Return of 0.35. Its Beta is 1.33 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Alpha of -0.07 and a R-squared of 95.12.
XLK’s Mean Return is 1.35 points higher than that of BIV and its R-squared is 21.56 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than BIV. The Alpha and Beta of XLK are 10.50 points higher and 0.38 points lower than BIV’s Alpha and Beta.
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XLK had its best year in 2019 with an annual return of 49.97%. XLK’s worst year over the past decade yielded -1.56% and occurred in 2018. In most years the Technology Select Sector SPDR Fund provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 14.81%, 15.47%, and 17.75% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in XLK would have resulted in a final balance of $67,790. This is a profit of $57,790 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.02%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
XLK’s CAGR is 14.71 percentage points higher than that of BIV and as a result, would have yielded $50,298 more on a $10,000 investment. Thus, XLK outperformed BIV by 14.71% annually.
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