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XLK vs. VOE: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between XLK and VOE? And which fund is better?

The expense ratio of XLK is 0.05 percentage points higher than VOE’s (0.12% vs. 0.07%). XLK also has a higher exposure to the technology sector and a lower standard deviation. Overall, XLK has provided higher returns than VOE over the past ten years.

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

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Summary

XLKVOE
NameTechnology Select Sector SPDR FundVanguard Mid-Cap Value Index Fund ETF Shares
CategoryTechnologyMid-Cap Value
IssuerSPDR State Street Global AdvisorsVanguard
AUM42.3B26.78B
Avg. Return20.02%12.52%
Div. Yield0.73%1.87%
Expense Ratio0.12%0.07%

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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

XLK’s dividend yield is 1.14% lower than that of VOE (0.73% vs. 1.87%). Also, XLK yielded on average 7.50% more per year over the past decade (20.02% vs. 12.52%). The expense ratio of XLK is 0.05 percentage points higher than VOE’s (0.12% vs. 0.07%).

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Fund Composition

Industry Exposure

XLK vs. VOE - Industry Exposure

XLKVOE
Technology87.54%9.85%
Industrials1.75%9.4%
Energy0.0%5.69%
Communication Services0.0%5.27%
Utilities0.0%10.93%
Healthcare0.0%7.04%
Consumer Defensive0.0%4.85%
Real Estate0.0%11.48%
Financial Services10.71%18.26%
Consumer Cyclical0.0%11.8%
Basic Materials0.0%5.44%

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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

XLK is 77.69% more exposed to the Technology sector than VOE (87.54% vs 9.85%). XLK’s exposure to Financial Services and Industrials stocks is 7.55% lower and 7.65% lower respectively (10.71% vs. 18.26% and 1.75% vs. 9.4%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 28.13% less of the fund’s holdings compared to VOE (0.00% vs. 28.13%).

Holdings

XLK - Holdings

XLK HoldingsWeight
Apple Inc21.45%
Microsoft Corp20.37%
NVIDIA Corp4.98%
Visa Inc Class A3.95%
PayPal Holdings Inc3.42%
Mastercard Inc A3.19%
Adobe Inc2.8%
Salesforce.com Inc2.26%
Intel Corp2.26%
Cisco Systems Inc2.23%

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%.

VOE - Holdings

VOE HoldingsWeight
Carrier Global Corp Ordinary Shares1.28%
International Flavors & Fragrances Inc1.13%
Motorola Solutions Inc1.12%
Discover Financial Services1.09%
Welltower Inc1.05%
Corteva Inc0.99%
Valero Energy Corp0.97%
Corning Inc0.95%
Willis Towers Watson PLC0.9%
D.R. Horton Inc0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

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Risk Analysis

XLKVOE
Mean Return1.71.05
R-squared73.5688.76
Std. Deviation15.5815.98
Alpha10.43-3.77
Beta0.951.11
Sharpe Ratio1.270.75
Treynor Ratio21.4410.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Alpha of -3.77 with a Beta of 1.11 and a Treynor Ratio of 10.19. Its Standard Deviation is 15.98 while VOE’s R-squared is 88.76. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Mean Return of 1.05.

XLK’s Mean Return is 0.65 points higher than that of VOE and its R-squared is 15.20 points lower. With a Standard Deviation of 15.58, XLK is slightly less volatile than VOE. The Alpha and Beta of XLK are 14.20 points higher and 0.16 points lower than VOE’s Alpha and Beta.

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Performance

Annual Returns

XLK vs. VOE - Annual Returns

YearXLKVOE
202043.67%2.5%
201949.97%27.98%
2018-1.56%-12.41%
201734.27%17.05%
201614.81%15.26%
20155.62%-1.8%
201417.75%13.98%
201325.98%37.65%
201215.47%16.04%
20112.69%-0.32%
201011.6%21.83%

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 2013 was the strongest year for VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

XLK vs. VOE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLK$10,000$67,79020.02%
VOE$10,000$33,65512.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

XLK’s CAGR is 7.50 percentage points higher than that of VOE and as a result, would have yielded $34,135 more on a $10,000 investment. Thus, XLK outperformed VOE by 7.50% annually.


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