XLK vs. SCHF: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between XLK and SCHF? And which fund is better?

The expense ratio of XLK is 0.06 percentage points higher than SCHF’s (0.12% vs. 0.06%). XLK also has a higher exposure to the technology sector and a higher standard deviation. Overall, XLK has provided higher returns than SCHF over the past ten years.

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

Summary

XLK SCHF
Name Technology Select Sector SPDR Fund Schwab International Equity ETF
Category Technology Foreign Large Blend
Issuer SPDR State Street Global Advisors Schwab ETFs
AUM 42.3B 26.99B
Avg. Return 20.02% 6.43%
Div. Yield 0.73% 2.16%
Expense Ratio 0.12% 0.06%

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 Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.

XLK’s dividend yield is 1.43% lower than that of SCHF (0.73% vs. 2.16%). Also, XLK yielded on average 13.60% more per year over the past decade (20.02% vs. 6.43%). The expense ratio of XLK is 0.06 percentage points higher than SCHF’s (0.12% vs. 0.06%).

Fund Composition

Industry Exposure

XLK vs. SCHF - Industry Exposure

XLK SCHF
Technology 87.54% 11.55%
Industrials 1.75% 14.86%
Energy 0.0% 4.23%
Communication Services 0.0% 5.65%
Utilities 0.0% 3.09%
Healthcare 0.0% 11.05%
Consumer Defensive 0.0% 9.41%
Real Estate 0.0% 3.17%
Financial Services 10.71% 17.85%
Consumer Cyclical 0.0% 10.87%
Basic Materials 0.0% 8.26%

The Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 87.54%. This is followed by Financial Services and Industrials at 10.71% and 1.75% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

XLK’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 1.75%.

The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

XLK is 75.99% more exposed to the Technology sector than SCHF (87.54% vs 11.55%). XLK’s exposure to Financial Services and Industrials stocks is 7.14% lower and 13.11% lower respectively (10.71% vs. 17.85% and 1.75% vs. 14.86%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 23.45% less of the fund’s holdings compared to SCHF (0.00% vs. 23.45%).

Holdings

XLK - Holdings

XLK Holdings Weight
Apple Inc 21.45%
Microsoft Corp 20.37%
NVIDIA Corp 4.98%
Visa Inc Class A 3.95%
PayPal Holdings Inc 3.42%
Mastercard Inc A 3.19%
Adobe Inc 2.8%
Salesforce.com Inc 2.26%
Intel Corp 2.26%
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%.

SCHF - Holdings

SCHF Holdings Weight
Nestle SA 1.66%
Samsung Electronics Co Ltd 1.6%
ASML Holding NV 1.29%
Roche Holding AG 1.24%
Toyota Motor Corp 1.02%
LVMH Moet Hennessy Louis Vuitton SE 0.93%
Novartis AG 0.92%
Shopify Inc A 0.78%
AstraZeneca PLC 0.75%
SAP SE 0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

Risk Analysis

XLK SCHF
Mean Return 1.7 0.58
R-squared 73.56 98.16
Std. Deviation 15.58 15.08
Alpha 10.43 0.53
Beta 0.95 0.99
Sharpe Ratio 1.27 0.42
Treynor Ratio 21.44 5.39

The Technology Select Sector SPDR Fund (XLK) has a Sharpe Ratio of 1.27 with a Mean Return of 1.7 and a Standard Deviation of 15.58. Its Treynor Ratio is 21.44 while XLK’s R-squared is 73.56. Furthermore, the fund has a Beta of 0.95 and a Alpha of 10.43.

The Schwab International Equity ETF (SCHF) has a Beta of 0.99 with a Alpha of 0.53 and a Standard Deviation of 15.08. Its R-squared is 98.16 while SCHF’s Sharpe Ratio is 0.42. Furthermore, the fund has a Treynor Ratio of 5.39 and a Mean Return of 0.58.

XLK’s Mean Return is 1.12 points higher than that of SCHF and its R-squared is 24.60 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than SCHF. The Alpha and Beta of XLK are 9.90 points higher and 0.04 points lower than SCHF’s Alpha and Beta.

Performance

Annual Returns

XLK vs. SCHF - Annual Returns

Year XLK SCHF
2020 43.67% 9.86%
2019 49.97% 22.15%
2018 -1.56% -14.39%
2017 34.27% 25.83%
2016 14.81% 2.88%
2015 5.62% -2.44%
2014 17.75% -4.44%
2013 25.98% 20.03%
2012 15.47% 17.12%
2011 2.69% -12.32%
2010 11.6% 8.6%

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 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% respectively.

Portfolio Growth

XLK vs. SCHF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLK $10,000 $60,744 20.02%
SCHF $10,000 $17,089 6.43%

A $10,000 investment in XLK would have resulted in a final balance of $60,744. This is a profit of $50,744 over 10 years and amounts to a compound annual growth rate (CAGR) of 20.02%.

With a $10,000 investment in SCHF, the end total would have been $17,089. This equates to a $7,089 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.

XLK’s CAGR is 13.60 percentage points higher than that of SCHF and as a result, would have yielded $43,655 more on a $10,000 investment. Thus, XLK outperformed SCHF by 13.60% annually.


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