XLV vs. DGRO: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and DGRO is a iShares Large Value fund. So, what’s the difference between XLV and DGRO? And which fund is better?

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

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

Summary

XLV DGRO
Name Health Care Select Sector SPDR Fund iShares Core Dividend Growth ETF
Category Health Large Value
Issuer SPDR State Street Global Advisors iShares
AUM 27.88B 20B
Avg. Return 15.02% 12.46%
Div. Yield 1.4% 2.04%
Expense Ratio 0.12% 0.08%

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 iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

XLV’s dividend yield is 0.64% lower than that of DGRO (1.4% vs. 2.04%). Also, XLV yielded on average 2.57% more per year over the past decade (15.02% vs. 12.46%). The expense ratio of XLV is 0.04 percentage points higher than DGRO’s (0.12% vs. 0.08%).

Fund Composition

Industry Exposure

XLV vs. DGRO - Industry Exposure

XLV DGRO
Technology 0.0% 18.98%
Industrials 0.0% 12.52%
Energy 0.0% 0.11%
Communication Services 0.0% 4.53%
Utilities 0.0% 7.34%
Healthcare 100.0% 17.55%
Consumer Defensive 0.0% 10.24%
Real Estate 0.0% 0.0%
Financial Services 0.0% 18.47%
Consumer Cyclical 0.0% 7.42%
Basic Materials 0.0% 2.83%

The Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

XLV is 82.45% more exposed to the Healthcare sector than DGRO (100.0% vs 17.55%). XLV’s exposure to Technology and Industrials stocks is 18.98% lower and 12.52% lower respectively (0.0% vs. 18.98% and 0.0% vs. 12.52%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 25.89% less of the fund’s holdings compared to DGRO (0.00% vs. 25.89%).

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%.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

Risk Analysis

XLV DGRO
Mean Return 1.27 0
R-squared 58.19 0
Std. Deviation 12.94 0
Alpha 7.75 0
Beta 0.7 0
Sharpe Ratio 1.13 0
Treynor Ratio 21.1 0

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

The iShares Core Dividend Growth ETF (DGRO) has a Standard Deviation of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its Mean Return is 0 while DGRO’s Beta is 0. Furthermore, the fund has a Treynor Ratio of 0 and a R-squared of 0.

XLV’s Mean Return is 1.27 points higher than that of DGRO and its R-squared is 58.19 points higher. With a Standard Deviation of 12.94, XLV is slightly more volatile than DGRO. The Alpha and Beta of XLV are 7.75 points higher and 0.70 points higher than DGRO’s Alpha and Beta.

Performance

Annual Returns

XLV vs. DGRO - Annual Returns

Year XLV DGRO
2020 13.33% 9.47%
2019 20.63% 30.02%
2018 6.3% -2.24%
2017 21.7% 22.84%
2016 -2.83% 15.27%
2015 6.82% -0.62%
2014 25.17% 0.0%
2013 41.24% 0.0%
2012 17.56% 0.0%
2011 12.44% 0.0%
2010 2.91% 0.0%

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 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

XLV vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $18,357 15.02%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in XLV would have resulted in a final balance of $18,357. This is a profit of $8,357 over 6 years and amounts to a compound annual growth rate (CAGR) of 15.02%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

XLV’s CAGR is 2.57 percentage points higher than that of DGRO and as a result, would have yielded $1,223 less on a $10,000 investment. Thus, XLV outperformed DGRO by 2.57% 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