XLK vs. VT: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and VT is a Vanguard N/A fund. So, what’s the difference between XLK and VT? And which fund is better?

The expense ratio of XLK is 0.04 percentage points higher than VT’s (0.12% vs. 0.08%). XLK also has a higher exposure to the technology sector and a higher standard deviation. Overall, XLK has provided higher returns than VT over the past ten years.

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

Summary

XLK VT
Name Technology Select Sector SPDR Fund Vanguard Total World Stock Index Fund ETF Shares
Category Technology N/A
Issuer SPDR State Street Global Advisors Vanguard
AUM 42.3B 30.44B
Avg. Return 20.02% 10.42%
Div. Yield 0.73% 1.65%
Expense Ratio 0.12% 0.08%

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 World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

XLK’s dividend yield is 0.92% lower than that of VT (0.73% vs. 1.65%). Also, XLK yielded on average 9.61% more per year over the past decade (20.02% vs. 10.42%). The expense ratio of XLK is 0.04 percentage points higher than VT’s (0.12% vs. 0.08%).

Fund Composition

Industry Exposure

XLK vs. VT - Industry Exposure

XLK VT
Technology 87.54% 19.63%
Industrials 1.75% 10.7%
Energy 0.0% 3.48%
Communication Services 0.0% 9.02%
Utilities 0.0% 2.6%
Healthcare 0.0% 11.58%
Consumer Defensive 0.0% 6.71%
Real Estate 0.0% 3.64%
Financial Services 10.71% 15.36%
Consumer Cyclical 0.0% 12.32%
Basic Materials 0.0% 4.97%

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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

XLK is 67.91% more exposed to the Technology sector than VT (87.54% vs 19.63%). XLK’s exposure to Financial Services and Industrials stocks is 4.65% lower and 8.95% lower respectively (10.71% vs. 15.36% and 1.75% vs. 10.7%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 22.67% less of the fund’s holdings compared to VT (0.00% vs. 22.67%).

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%.

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

Risk Analysis

XLK VT
Mean Return 1.7 0.9
R-squared 73.56 99.35
Std. Deviation 15.58 14.19
Alpha 10.43 0.2
Beta 0.95 1.01
Sharpe Ratio 1.27 0.71
Treynor Ratio 21.44 9.5

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

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Treynor Ratio of 9.5 with a Standard Deviation of 14.19 and a Mean Return of 0.9. Its Sharpe Ratio is 0.71 while VT’s Beta is 1.01. Furthermore, the fund has a Alpha of 0.2 and a R-squared of 99.35.

XLK’s Mean Return is 0.80 points higher than that of VT and its R-squared is 25.79 points lower. With a Standard Deviation of 15.58, XLK is slightly more volatile than VT. The Alpha and Beta of XLK are 10.23 points higher and 0.06 points lower than VT’s Alpha and Beta.

Performance

Annual Returns

XLK vs. VT - Annual Returns

Year XLK VT
2020 43.67% 16.74%
2019 49.97% 26.8%
2018 -1.56% -9.67%
2017 34.27% 24.19%
2016 14.81% 8.77%
2015 5.62% -1.88%
2014 17.75% 3.97%
2013 25.98% 22.98%
2012 15.47% 17.33%
2011 2.69% -7.71%
2010 11.6% 13.05%

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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

XLK vs. VT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLK $10,000 $67,790 20.02%
VT $10,000 $27,739 10.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

XLK’s CAGR is 9.61 percentage points higher than that of VT and as a result, would have yielded $40,051 more on a $10,000 investment. Thus, XLK outperformed VT by 9.61% annually.


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