XLV vs. BIV: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between XLV and BIV? And which fund is better?

The expense ratio of XLV is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%). XLV also has a high exposure to the healthcare sector while BIV is mostly comprised of AAA bonds. Overall, XLV has provided higher returns than BIV over the past ten years.

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

Summary

XLV BIV
Name Health Care Select Sector SPDR Fund Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Health Intermediate-Term Bond
Issuer SPDR State Street Global Advisors Vanguard
AUM 27.88B 39.05B
Avg. Return 15.02% 5.31%
Div. Yield 1.4% 2.06%
Expense Ratio 0.12% 0.05%

The Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

XLV’s dividend yield is 0.66% lower than that of BIV (1.4% vs. 2.06%). Also, XLV yielded on average 9.71% more per year over the past decade (15.02% vs. 5.31%). The expense ratio of XLV is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%).

Fund Composition

Holdings

XLV - Holdings

XLV Holdings Weight
Johnson & Johnson 9.19%
UnitedHealth Group Inc 8.01%
Pfizer Inc 4.64%
Abbott Laboratories 4.36%
AbbVie Inc 4.21%
Thermo Fisher Scientific Inc 4.2%
Merck & Co Inc 4.17%
Eli Lilly and Co 3.87%
Danaher Corp 3.61%
Medtronic PLC 3.54%

XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.

Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

Risk Analysis

XLV BIV
Mean Return 1.27 0.35
R-squared 58.19 95.12
Std. Deviation 12.94 4.09
Alpha 7.75 -0.07
Beta 0.7 1.33
Sharpe Ratio 1.13 0.89
Treynor Ratio 21.1 2.72

The Health Care Select Sector SPDR Fund (XLV) has a Treynor Ratio of 21.1 with a Beta of 0.7 and a R-squared of 58.19. Its Alpha is 7.75 while XLV’s Sharpe Ratio is 1.13. Furthermore, the fund has a Standard Deviation of 12.94 and a Mean Return of 1.27.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Mean Return of 0.35 with a R-squared of 95.12 and a Beta of 1.33. Its Alpha is -0.07 while BIV’s Sharpe Ratio is 0.89. Furthermore, the fund has a Standard Deviation of 4.09 and a Treynor Ratio of 2.72.

XLV’s Mean Return is 0.92 points higher than that of BIV and its R-squared is 36.93 points lower. With a Standard Deviation of 12.94, XLV is slightly more volatile than BIV. The Alpha and Beta of XLV are 7.82 points higher and 0.63 points lower than BIV’s Alpha and Beta.

Performance

Annual Returns

XLV vs. BIV - Annual Returns

Year XLV BIV
2020 13.33% 9.71%
2019 20.63% 10.19%
2018 6.3% -0.09%
2017 21.7% 3.8%
2016 -2.83% 2.86%
2015 6.82% 1.23%
2014 25.17% 7.0%
2013 41.24% -3.44%
2012 17.56% 7.02%
2011 12.44% 10.62%
2010 2.91% 9.55%

XLV had its best year in 2013 with an annual return of 41.24%. XLV’s worst year over the past decade yielded -2.83% and occurred in 2016. In most years the Health Care Select Sector SPDR Fund provided moderate returns such as in 2011, 2020, and 2012 where annual returns amounted to 12.44%, 13.33%, and 17.56% respectively.

The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

XLV vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
BIV $10,000 $17,492 5.31%

A $10,000 investment in XLV would have resulted in a final balance of $44,147. This is a profit of $34,147 over 11 years and amounts to a compound annual growth rate (CAGR) of 15.02%.

With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.

XLV’s CAGR is 9.71 percentage points higher than that of BIV and as a result, would have yielded $26,655 more on a $10,000 investment. Thus, XLV outperformed BIV by 9.71% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply