The Technology Select Sector SPDR Fund (XLK) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between XLK and BSV? And which fund is better?
The expense ratio of XLK is 0.07 percentage points higher than BSV’s (0.12% vs. 0.05%). XLK also has a high exposure to the technology sector while BSV is mostly comprised of AAA bonds. Overall, XLK has provided higher returns than BSV over the past ten years.
In this article, we’ll compare XLK vs. BSV. We’ll look at industry exposure and risk metrics, as well as at their performance and holdings. Moreover, I’ll also discuss XLK’s and BSV’s fund composition, portfolio growth, and annual returns and examine how these affect their overall returns.
|Name||Technology Select Sector SPDR Fund||Vanguard Short-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 Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
XLK’s dividend yield is 0.75% lower than that of BSV (0.73% vs. 1.48%). Also, XLK yielded on average 17.75% more per year over the past decade (20.02% vs. 2.27%). The expense ratio of XLK is 0.07 percentage points higher than BSV’s (0.12% vs. 0.05%).
|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%.
|BSV Bond Sectors||Weight|
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
The Technology Select Sector SPDR Fund (XLK) has a Beta of 0.95 with a Standard Deviation of 15.58 and a Alpha of 10.43. Its Sharpe Ratio is 1.27 while XLK’s R-squared is 73.56. Furthermore, the fund has a Treynor Ratio of 21.44 and a Mean Return of 1.7.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Standard Deviation of 1.33 with a Treynor Ratio of 3.33 and a Sharpe Ratio of 0.98. Its Mean Return is 0.16 while BSV’s Alpha is 0.21. Furthermore, the fund has a Beta of 0.38 and a R-squared of 78.38.
XLK’s Mean Return is 1.54 points higher than that of BSV and its R-squared is 4.82 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than BSV. The Alpha and Beta of XLK are 10.22 points higher and 0.57 points higher than BSV’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 2019 was the strongest year for BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% 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 BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
XLK’s CAGR is 17.75 percentage points higher than that of BSV and as a result, would have yielded $55,005 more on a $10,000 investment. Thus, XLK outperformed BSV by 17.75% annually.
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