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XLV vs. MDY: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between XLV and MDY? And which fund is better?

The expense ratio of XLV is 0.11 percentage points lower than MDY’s (0.12% vs. 0.23%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than MDY over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

XLVMDY
NameHealth Care Select Sector SPDR FundSPDR S&P MIDCAP 400 ETF Trust
CategoryHealthMid-Cap Blend
IssuerSPDR State Street Global AdvisorsSPDR State Street Global Advisors
AUM27.88B21.31B
Avg. Return15.02%13.29%
Div. Yield1.4%0.94%
Expense Ratio0.12%0.23%

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 SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.

XLV’s dividend yield is 0.46% higher than that of MDY (1.4% vs. 0.94%). Also, XLV yielded on average 1.74% more per year over the past decade (15.02% vs. 13.29%). The expense ratio of XLV is 0.11 percentage points lower than MDY’s (0.12% vs. 0.23%).

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Fund Composition

Industry Exposure

XLV vs. MDY - Industry Exposure

XLVMDY
Technology0.0%14.74%
Industrials0.0%17.88%
Energy0.0%2.52%
Communication Services0.0%1.63%
Utilities0.0%2.84%
Healthcare100.0%11.17%
Consumer Defensive0.0%4.2%
Real Estate0.0%9.66%
Financial Services0.0%15.2%
Consumer Cyclical0.0%14.89%
Basic Materials0.0%5.27%

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 SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.

MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.

XLV is 88.83% more exposed to the Healthcare sector than MDY (100.0% vs 11.17%). XLV’s exposure to Technology and Industrials stocks is 14.74% lower and 17.88% lower respectively (0.0% vs. 14.74% and 0.0% vs. 17.88%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 39.75% less of the fund’s holdings compared to MDY (0.00% vs. 39.75%).

Holdings

XLV - Holdings

XLV HoldingsWeight
Johnson & Johnson9.19%
UnitedHealth Group Inc8.01%
Pfizer Inc4.64%
Abbott Laboratories4.36%
AbbVie Inc4.21%
Thermo Fisher Scientific Inc4.2%
Merck & Co Inc4.17%
Eli Lilly and Co3.87%
Danaher Corp3.61%
Medtronic PLC3.54%

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%.

MDY - Holdings

MDY HoldingsWeight
Bio-Techne Corp0.75%
Molina Healthcare Inc0.63%
Cognex Corp0.63%
Fair Isaac Corp0.62%
XPO Logistics Inc0.61%
SolarEdge Technologies Inc0.61%
Signature Bank0.6%
Graco Inc0.55%
Camden Property Trust0.55%
FactSet Research Systems Inc0.54%

MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.

SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.

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Risk Analysis

XLVMDY
Mean Return1.271.08
R-squared58.1986.66
Std. Deviation12.9416.83
Alpha7.75-4.1
Beta0.71.15
Sharpe Ratio1.130.73
Treynor Ratio21.19.97

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

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Beta of 1.15 with a R-squared of 86.66 and a Mean Return of 1.08. Its Sharpe Ratio is 0.73 while MDY’s Standard Deviation is 16.83. Furthermore, the fund has a Treynor Ratio of 9.97 and a Alpha of -4.1.

XLV’s Mean Return is 0.19 points higher than that of MDY and its R-squared is 28.47 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than MDY. The Alpha and Beta of XLV are 11.85 points higher and 0.45 points lower than MDY’s Alpha and Beta.

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Performance

Annual Returns

XLV vs. MDY - Annual Returns

YearXLVMDY
202013.33%13.51%
201920.63%25.86%
20186.3%-11.28%
201721.7%15.89%
2016-2.83%20.33%
20156.82%-2.4%
201425.17%9.42%
201341.24%33.08%
201217.56%17.58%
201112.44%-1.99%
20102.91%26.17%

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 2013 was the strongest year for MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.

Portfolio Growth

XLV vs. MDY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
MDY$10,000$36,52413.29%

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 MDY, the end total would have been $36,524. This equates to a $26,524 profit over 11 years and a compound annual growth rate (CAGR) of 13.29%.

XLV’s CAGR is 1.74 percentage points higher than that of MDY and as a result, would have yielded $7,623 more on a $10,000 investment. Thus, XLV outperformed MDY by 1.74% annually.


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