XLV vs. SDY: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between XLV and SDY? And which fund is better?

The expense ratio of XLV is 0.23 percentage points lower than SDY’s (0.12% vs. 0.35%). XLV also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, XLV has provided higher returns than SDY over the past ten years.

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

Summary

XLV SDY
Name Health Care Select Sector SPDR Fund SPDR S&P Dividend ETF
Category Health Large Value
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 27.88B 19.67B
Avg. Return 15.02% 12.44%
Div. Yield 1.4% 2.65%
Expense Ratio 0.12% 0.35%

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 Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

XLV’s dividend yield is 1.25% lower than that of SDY (1.4% vs. 2.65%). Also, XLV yielded on average 2.59% more per year over the past decade (15.02% vs. 12.44%). The expense ratio of XLV is 0.23 percentage points lower than SDY’s (0.12% vs. 0.35%).

Fund Composition

Industry Exposure

XLV vs. SDY - Industry Exposure

XLV SDY
Technology 0.0% 2.0%
Industrials 0.0% 15.89%
Energy 0.0% 5.95%
Communication Services 0.0% 4.64%
Utilities 0.0% 12.14%
Healthcare 100.0% 7.35%
Consumer Defensive 0.0% 14.01%
Real Estate 0.0% 6.57%
Financial Services 0.0% 16.32%
Consumer Cyclical 0.0% 8.68%
Basic Materials 0.0% 6.45%

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 Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

XLV is 92.65% more exposed to the Healthcare sector than SDY (100.0% vs 7.35%). XLV’s exposure to Technology and Industrials stocks is 2.00% lower and 15.89% lower respectively (0.0% vs. 2.0% and 0.0% vs. 15.89%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 31.57% less of the fund’s holdings compared to SDY (0.00% vs. 31.57%).

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%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

Risk Analysis

XLV SDY
Mean Return 1.27 1.07
R-squared 58.19 83.62
Std. Deviation 12.94 12.9
Alpha 7.75 -0.1
Beta 0.7 0.87
Sharpe Ratio 1.13 0.95
Treynor Ratio 21.1 13.94

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

The SPDR S&P Dividend ETF (SDY) has a Sharpe Ratio of 0.95 with a R-squared of 83.62 and a Mean Return of 1.07. Its Treynor Ratio is 13.94 while SDY’s Standard Deviation is 12.9. Furthermore, the fund has a Alpha of -0.1 and a Beta of 0.87.

XLV’s Mean Return is 0.20 points higher than that of SDY and its R-squared is 25.43 points lower. With a Standard Deviation of 12.94, XLV is slightly more volatile than SDY. The Alpha and Beta of XLV are 7.85 points higher and 0.17 points lower than SDY’s Alpha and Beta.

Performance

Annual Returns

XLV vs. SDY - Annual Returns

Year XLV SDY
2020 13.33% 1.78%
2019 20.63% 23.37%
2018 6.3% -2.73%
2017 21.7% 15.84%
2016 -2.83% 20.17%
2015 6.82% -0.7%
2014 25.17% 13.8%
2013 41.24% 30.09%
2012 17.56% 11.51%
2011 12.44% 7.28%
2010 2.91% 16.41%

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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

XLV vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
SDY $10,000 $34,806 12.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

XLV’s CAGR is 2.59 percentage points higher than that of SDY and as a result, would have yielded $9,341 more on a $10,000 investment. Thus, XLV outperformed SDY by 2.59% 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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

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

Leave a Reply