The Technology Select Sector SPDR Fund (XLK) and the Vanguard Total International Bond Index Fund ETF Shares (BNDX) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and BNDX is a Vanguard N/A fund. So, what’s the difference between XLK and BNDX? And which fund is better?
The expense ratio of XLK is 0.04 percentage points higher than BNDX’s (0.12% vs. 0.08%). XLK also has a high exposure to the technology sector while BNDX is mostly comprised of A bonds. Overall, XLK has provided higher returns than BNDX over the past ten years.
In this article, we’ll compare XLK vs. BNDX. We’ll look at annual returns and portfolio growth, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss XLK’s and BNDX’s performance, risk metrics, and holdings and examine how these affect their overall returns.
|Name||Technology Select Sector SPDR Fund||Vanguard Total International 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 Total International Bond Index Fund ETF Shares (BNDX) is a N/A fund that is issued by Vanguard. It currently has 116.41B total assets under management and has yielded an average annual return of 4.63% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.08%.
XLK’s dividend yield is 0.21% lower than that of BNDX (0.73% vs. 0.94%). Also, XLK yielded on average 15.40% more per year over the past decade (20.02% vs. 4.63%). The expense ratio of XLK is 0.04 percentage points higher than BNDX’s (0.12% vs. 0.08%).
|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%.
|BNDX Bond Sectors||Weight|
BNDX’s Top Bond Sectors are ratings of A, AA, AAA, BBB, and Others at 29.19%, 26.79%, 21.59%, 19.41%, and 1.57%. The fund is less weighted towards Below B (1.45%), B (0.0%), and BB (0.0%) rated bonds.
The Technology Select Sector SPDR Fund (XLK) has a Beta of 0.95 with a R-squared of 73.56 and a Mean Return of 1.7. Its Sharpe Ratio is 1.27 while XLK’s Standard Deviation is 15.58. Furthermore, the fund has a Treynor Ratio of 21.44 and a Alpha of 10.43.
The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a Mean Return of 0. Its Beta is 0 while BNDX’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.
XLK’s Mean Return is 1.70 points higher than that of BNDX and its R-squared is 73.56 points higher. With a Standard Deviation of 15.58, XLK is slightly more volatile than BNDX. The Alpha and Beta of XLK are 10.43 points higher and 0.95 points higher than BNDX’s Alpha and Beta.
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 2014 was the strongest year for BNDX, returning 8.83% on an annual basis. The poorest year for BNDX in the last ten years was 2013, with a yield of 0.0%. Most years the Vanguard Total International Bond Index Fund ETF Shares has given investors modest returns, such as in 2015, 2017, and 2018, when gains were 1.08%, 2.4%, and 2.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in XLK would have resulted in a final balance of $40,663. This is a profit of $30,663 over 7 years and amounts to a compound annual growth rate (CAGR) of 20.02%.
With a $10,000 investment in BNDX, the end total would have been $13,695. This equates to a $3,695 profit over 7 years and a compound annual growth rate (CAGR) of 4.63%.
XLK’s CAGR is 15.40 percentage points higher than that of BNDX and as a result, would have yielded $26,968 more on a $10,000 investment. Thus, XLK outperformed BNDX by 15.40% annually.
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