Skip to content

XLV vs. SCHA: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between XLV and SCHA? And which fund is better?

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

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

Summary

XLVSCHA
NameHealth Care Select Sector SPDR FundSchwab U.S. Small-Cap ETF
CategoryHealthSmall Blend
IssuerSPDR State Street Global AdvisorsSchwab ETFs
AUM27.88B16.51B
Avg. Return15.02%12.62%
Div. Yield1.4%0.98%
Expense Ratio0.12%0.04%

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 Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.

XLV’s dividend yield is 0.42% higher than that of SCHA (1.4% vs. 0.98%). Also, XLV yielded on average 2.40% more per year over the past decade (15.02% vs. 12.62%). The expense ratio of XLV is 0.08 percentage points higher than SCHA’s (0.12% vs. 0.04%).

Fund Composition

Industry Exposure

XLV vs. SCHA - Industry Exposure

XLVSCHA
Technology0.0%14.91%
Industrials0.0%15.37%
Energy0.0%3.35%
Communication Services0.0%3.5%
Utilities0.0%1.83%
Healthcare100.0%16.5%
Consumer Defensive0.0%3.75%
Real Estate0.0%7.83%
Financial Services0.0%14.49%
Consumer Cyclical0.0%14.48%
Basic Materials0.0%3.98%

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 Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.

SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.

XLV is 83.50% more exposed to the Healthcare sector than SCHA (100.0% vs 16.5%). XLV’s exposure to Technology and Industrials stocks is 14.91% lower and 15.37% lower respectively (0.0% vs. 14.91% and 0.0% vs. 15.37%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 36.80% less of the fund’s holdings compared to SCHA (0.00% vs. 36.80%).

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%.

SCHA - Holdings

SCHA HoldingsWeight
AMC Entertainment Holdings Inc Class A0.67%
Caesars Entertainment Inc0.51%
Cloudflare Inc0.48%
NovoCure Ltd0.45%
Plug Power Inc0.41%
10x Genomics Inc Ordinary Shares – Class A0.34%
GameStop Corp Class A0.28%
RH0.27%
Penn National Gaming Inc0.27%
Axon Enterprise Inc0.27%

SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.

10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.

Risk Analysis

XLVSCHA
Mean Return1.271.14
R-squared58.1982.26
Std. Deviation12.9418.68
Alpha7.75-4.65
Beta0.71.25
Sharpe Ratio1.130.7
Treynor Ratio21.19.62

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

The Schwab U.S. Small-Cap ETF (SCHA) has a Beta of 1.25 with a Mean Return of 1.14 and a Alpha of -4.65. Its Standard Deviation is 18.68 while SCHA’s R-squared is 82.26. Furthermore, the fund has a Treynor Ratio of 9.62 and a Sharpe Ratio of 0.7.

XLV’s Mean Return is 0.13 points higher than that of SCHA and its R-squared is 24.07 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than SCHA. The Alpha and Beta of XLV are 12.40 points higher and 0.55 points lower than SCHA’s Alpha and Beta.

Performance

Annual Returns

XLV vs. SCHA - Annual Returns

YearXLVSCHA
202013.33%19.35%
201920.63%26.54%
20186.3%-11.75%
201721.7%15.04%
2016-2.83%19.88%
20156.82%-4.24%
201425.17%6.53%
201341.24%39.59%
201217.56%18.24%
201112.44%-2.95%
20102.91%28.31%

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 SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.

Portfolio Growth

XLV vs. SCHA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$42,89915.02%
SCHA$10,000$30,03512.62%

A $10,000 investment in XLV would have resulted in a final balance of $42,899. This is a profit of $32,899 over 10 years and amounts to a compound annual growth rate (CAGR) of 15.02%.

With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.

XLV’s CAGR is 2.40 percentage points higher than that of SCHA and as a result, would have yielded $12,864 more on a $10,000 investment. Thus, XLV outperformed SCHA by 2.40% 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.

9125d72911bdc1f2dd2d1918a15aaf4c?s=250&d=mm&r=g

Leave a Reply

Your email address will not be published. Required fields are marked *