Skip to content

XLV vs. MUB: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between XLV and MUB? And which fund is better?

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

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

XLVMUB
NameHealth Care Select Sector SPDR FundiShares National Muni Bond ETF
CategoryHealthMuni National Interm
IssuerSPDR State Street Global AdvisorsiShares
AUM27.88B22.71B
Avg. Return15.02%4.04%
Div. Yield1.4%1.96%
Expense Ratio0.12%0.07%

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 National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.

XLV’s dividend yield is 0.56% lower than that of MUB (1.4% vs. 1.96%). Also, XLV yielded on average 10.99% more per year over the past decade (15.02% vs. 4.04%). The expense ratio of XLV is 0.05 percentage points higher than MUB’s (0.12% vs. 0.07%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

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%.

MUB - Holdings

MUB Bond SectorsWeight
AA60.38%
AAA18.39%
A15.04%
BBB6.0%
Others0.17%
BB0.02%
Below B0.0%
B0.0%
US Government0.0%

MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

XLVMUB
Mean Return1.270.32
R-squared58.1999
Std. Deviation12.943.68
Alpha7.75-0.46
Beta0.71.01
Sharpe Ratio1.130.88
Treynor Ratio21.13.2

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

The iShares National Muni Bond ETF (MUB) has a Beta of 1.01 with a Mean Return of 0.32 and a Treynor Ratio of 3.2. Its Standard Deviation is 3.68 while MUB’s Alpha is -0.46. Furthermore, the fund has a Sharpe Ratio of 0.88 and a R-squared of 99.

XLV’s Mean Return is 0.95 points higher than that of MUB and its R-squared is 40.81 points lower. With a Standard Deviation of 12.94, XLV is slightly more volatile than MUB. The Alpha and Beta of XLV are 8.21 points higher and 0.31 points lower than MUB’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

XLV vs. MUB - Annual Returns

YearXLVMUB
202013.33%4.87%
201920.63%7.28%
20186.3%0.86%
201721.7%4.61%
2016-2.83%0.06%
20156.82%2.99%
201425.17%8.61%
201341.24%-3.26%
201217.56%6.14%
201112.44%10.85%
20102.91%1.4%

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 MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% respectively.

Portfolio Growth

XLV vs. MUB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
MUB$10,000$15,3334.04%

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 MUB, the end total would have been $15,333. This equates to a $5,333 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.

XLV’s CAGR is 10.99 percentage points higher than that of MUB and as a result, would have yielded $28,814 more on a $10,000 investment. Thus, XLV outperformed MUB by 10.99% 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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) 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!

3) 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!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

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

Leave a Reply

Your email address will not be published.