The Technology Select Sector SPDR Fund (XLK) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between XLK and SCHG? And which fund is better?
The expense ratio of XLK is 0.08 percentage points higher than SCHG’s (0.12% vs. 0.04%). XLK also has a higher exposure to the technology sector and a higher standard deviation. Overall, XLK has provided higher returns than SCHG over the past ten years.
In this article, we’ll compare XLK vs. SCHG. We’ll look at holdings and industry exposure, as well as at their performance and portfolio growth. Moreover, I’ll also discuss XLK’s and SCHG’s fund composition, risk metrics, and annual returns and examine how these affect their overall returns.
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Summary
| XLK | SCHG | |
| Name | Technology Select Sector SPDR Fund | Schwab U.S. Large-Cap Growth ETF |
| Category | Technology | Large Growth |
| Issuer | SPDR State Street Global Advisors | Schwab ETFs |
| AUM | 42.3B | 15.16B |
| Avg. Return | 20.02% | 17.81% |
| Div. Yield | 0.73% | 0.43% |
| Expense Ratio | 0.12% | 0.04% |
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 U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
XLK’s dividend yield is 0.30% higher than that of SCHG (0.73% vs. 0.43%). Also, XLK yielded on average 2.21% more per year over the past decade (20.02% vs. 17.81%). The expense ratio of XLK is 0.08 percentage points higher than SCHG’s (0.12% vs. 0.04%).
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Fund Composition
Industry Exposure
| XLK | SCHG | |
| Technology | 87.54% | 39.21% |
| Industrials | 1.75% | 3.01% |
| Energy | 0.0% | 0.2% |
| Communication Services | 0.0% | 17.07% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 0.0% | 12.05% |
| Consumer Defensive | 0.0% | 2.15% |
| Real Estate | 0.0% | 1.64% |
| Financial Services | 10.71% | 7.98% |
| Consumer Cyclical | 0.0% | 15.01% |
| Basic Materials | 0.0% | 1.68% |
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%.
A related ETF comparison SCHG vs QQQ.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.
SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.
XLK is 48.33% more exposed to the Technology sector than SCHG (87.54% vs 39.21%). XLK’s exposure to Financial Services and Industrials stocks is 2.73% higher and 1.26% lower respectively (10.71% vs. 7.98% and 1.75% vs. 3.01%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 18.80% less of the fund’s holdings compared to SCHG (0.00% vs. 18.80%).
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%.
| SCHG Holdings | Weight |
| Apple Inc | 11.49% |
| Microsoft Corp | 10.91% |
| Amazon.com Inc | 7.89% |
| Facebook Inc A | 4.45% |
| Alphabet Inc A | 3.93% |
| Alphabet Inc Class C | 3.82% |
| Tesla Inc | 2.8% |
| NVIDIA Corp | 2.67% |
| Visa Inc Class A | 2.12% |
| UnitedHealth Group Inc | 2.02% |
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
Risk Analysis
| XLK | SCHG | |
| Mean Return | 1.7 | 1.46 |
| R-squared | 73.56 | 92.92 |
| Std. Deviation | 15.58 | 14.78 |
| Alpha | 10.43 | 1.97 |
| Beta | 0.95 | 1.05 |
| Sharpe Ratio | 1.27 | 1.14 |
| Treynor Ratio | 21.44 | 16.3 |
The Technology Select Sector SPDR Fund (XLK) has a Alpha of 10.43 with a Beta of 0.95 and a Standard Deviation of 15.58. Its Treynor Ratio is 21.44 while XLK’s Sharpe Ratio is 1.27. Furthermore, the fund has a Mean Return of 1.7 and a R-squared of 73.56.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Sharpe Ratio of 1.14 with a Mean Return of 1.46 and a Alpha of 1.97. Its Beta is 1.05 while SCHG’s R-squared is 92.92. Furthermore, the fund has a Standard Deviation of 14.78 and a Treynor Ratio of 16.3.
XLK’s Mean Return is 0.24 points higher than that of SCHG and its R-squared is 19.36 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than SCHG. The Alpha and Beta of XLK are 8.46 points higher and 0.10 points lower than SCHG’s Alpha and Beta.
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Performance
Annual Returns
| Year | XLK | SCHG |
| 2020 | 43.67% | 39.13% |
| 2019 | 49.97% | 36.21% |
| 2018 | -1.56% | -1.35% |
| 2017 | 34.27% | 28.04% |
| 2016 | 14.81% | 6.76% |
| 2015 | 5.62% | 3.26% |
| 2014 | 17.75% | 15.74% |
| 2013 | 25.98% | 33.96% |
| 2012 | 15.47% | 17.02% |
| 2011 | 2.69% | -0.67% |
| 2010 | 11.6% | 16.83% |
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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLK | $10,000 | $60,744 | 20.02% |
| SCHG | $10,000 | $47,556 | 17.81% |
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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.
XLK’s CAGR is 2.21 percentage points higher than that of SCHG and as a result, would have yielded $13,188 more on a $10,000 investment. Thus, XLK outperformed SCHG by 2.21% annually.
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