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.

Summary

XLV MDY
Name Health Care Select Sector SPDR Fund SPDR S&P MIDCAP 400 ETF Trust
Category Health Mid-Cap Blend
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 27.88B 21.31B
Avg. Return 15.02% 13.29%
Div. Yield 1.4% 0.94%
Expense Ratio 0.12% 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%).

Fund Composition

Industry Exposure

XLV vs. MDY - Industry Exposure

XLV MDY
Technology 0.0% 14.74%
Industrials 0.0% 17.88%
Energy 0.0% 2.52%
Communication Services 0.0% 1.63%
Utilities 0.0% 2.84%
Healthcare 100.0% 11.17%
Consumer Defensive 0.0% 4.2%
Real Estate 0.0% 9.66%
Financial Services 0.0% 15.2%
Consumer Cyclical 0.0% 14.89%
Basic Materials 0.0% 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 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%.

MDY - Holdings

MDY Holdings Weight
Bio-Techne Corp 0.75%
Molina Healthcare Inc 0.63%
Cognex Corp 0.63%
Fair Isaac Corp 0.62%
XPO Logistics Inc 0.61%
SolarEdge Technologies Inc 0.61%
Signature Bank 0.6%
Graco Inc 0.55%
Camden Property Trust 0.55%
FactSet Research Systems Inc 0.54%

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%.

Risk Analysis

XLV MDY
Mean Return 1.27 1.08
R-squared 58.19 86.66
Std. Deviation 12.94 16.83
Alpha 7.75 -4.1
Beta 0.7 1.15
Sharpe Ratio 1.13 0.73
Treynor Ratio 21.1 9.97

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.

Performance

Annual Returns

XLV vs. MDY - Annual Returns

Year XLV MDY
2020 13.33% 13.51%
2019 20.63% 25.86%
2018 6.3% -11.28%
2017 21.7% 15.89%
2016 -2.83% 20.33%
2015 6.82% -2.4%
2014 25.17% 9.42%
2013 41.24% 33.08%
2012 17.56% 17.58%
2011 12.44% -1.99%
2010 2.91% 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

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
MDY $10,000 $36,524 13.29%

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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