XLV vs. SCHG: Fund Composition, Risk Analysis & Performance

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

The expense ratio of XLV is 0.08 percentage points higher than SCHG’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 lower returns than SCHG over the past ten years.

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

Summary

XLV SCHG
Name Health Care Select Sector SPDR Fund Schwab U.S. Large-Cap Growth ETF
Category Health Large Growth
Issuer SPDR State Street Global Advisors Schwab ETFs
AUM 27.88B 15.16B
Avg. Return 15.02% 17.81%
Div. Yield 1.4% 0.43%
Expense Ratio 0.12% 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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

XLV’s dividend yield is 0.97% higher than that of SCHG (1.4% vs. 0.43%). Also, XLV yielded on average 2.79% less per year over the past decade (15.02% vs. 17.81%). The expense ratio of XLV is 0.08 percentage points higher than SCHG’s (0.12% vs. 0.04%).

Fund Composition

Industry Exposure

XLV vs. SCHG - Industry Exposure

XLV SCHG
Technology 0.0% 39.21%
Industrials 0.0% 3.01%
Energy 0.0% 0.2%
Communication Services 0.0% 17.07%
Utilities 0.0% 0.0%
Healthcare 100.0% 12.05%
Consumer Defensive 0.0% 2.15%
Real Estate 0.0% 1.64%
Financial Services 0.0% 7.98%
Consumer Cyclical 0.0% 15.01%
Basic Materials 0.0% 1.68%

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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

XLV is 87.95% more exposed to the Healthcare sector than SCHG (100.0% vs 12.05%). XLV’s exposure to Technology and Industrials stocks is 39.21% lower and 3.01% lower respectively (0.0% vs. 39.21% and 0.0% vs. 3.01%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 24.63% less of the fund’s holdings compared to SCHG (0.00% vs. 24.63%).

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%.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

Risk Analysis

XLV SCHG
Mean Return 1.27 1.46
R-squared 58.19 92.92
Std. Deviation 12.94 14.78
Alpha 7.75 1.97
Beta 0.7 1.05
Sharpe Ratio 1.13 1.14
Treynor Ratio 21.1 16.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Mean Return of 1.46 with a Sharpe Ratio of 1.14 and a Beta of 1.05. Its Treynor Ratio is 16.3 while SCHG’s Alpha is 1.97. Furthermore, the fund has a Standard Deviation of 14.78 and a R-squared of 92.92.

XLV’s Mean Return is 0.19 points lower than that of SCHG and its R-squared is 34.73 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than SCHG. The Alpha and Beta of XLV are 5.78 points higher and 0.35 points lower than SCHG’s Alpha and Beta.

Performance

Annual Returns

XLV vs. SCHG - Annual Returns

Year XLV SCHG
2020 13.33% 39.13%
2019 20.63% 36.21%
2018 6.3% -1.35%
2017 21.7% 28.04%
2016 -2.83% 6.76%
2015 6.82% 3.26%
2014 25.17% 15.74%
2013 41.24% 33.96%
2012 17.56% 17.02%
2011 12.44% -0.67%
2010 2.91% 16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

XLV vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $42,899 15.02%
SCHG $10,000 $47,556 17.81%

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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.

XLV’s CAGR is 2.79 percentage points lower than that of SCHG and as a result, would have yielded $4,657 less on a $10,000 investment. Thus, XLV performed worse than SCHG by 2.79% annually.


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