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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.

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Summary

XLVSDY
NameHealth Care Select Sector SPDR FundSPDR S&P Dividend ETF
CategoryHealthLarge Value
IssuerSPDR State Street Global AdvisorsSPDR State Street Global Advisors
AUM27.88B19.67B
Avg. Return15.02%12.44%
Div. Yield1.4%2.65%
Expense Ratio0.12%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%).

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Fund Composition

Industry Exposure

XLV vs. SDY - Industry Exposure

XLVSDY
Technology0.0%2.0%
Industrials0.0%15.89%
Energy0.0%5.95%
Communication Services0.0%4.64%
Utilities0.0%12.14%
Healthcare100.0%7.35%
Consumer Defensive0.0%14.01%
Real Estate0.0%6.57%
Financial Services0.0%16.32%
Consumer Cyclical0.0%8.68%
Basic Materials0.0%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 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%.

SDY - Holdings

SDY HoldingsWeight
Exxon Mobil Corp2.81%
AT&T Inc2.5%
South Jersey Industries Inc2.22%
Chevron Corp2.02%
International Business Machines Corp2.0%
AbbVie Inc1.93%
National Retail Properties Inc1.86%
Federal Realty Investment Trust1.77%
Realty Income Corp1.7%
Old Republic International Corp1.65%

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%.

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Risk Analysis

XLVSDY
Mean Return1.271.07
R-squared58.1983.62
Std. Deviation12.9412.9
Alpha7.75-0.1
Beta0.70.87
Sharpe Ratio1.130.95
Treynor Ratio21.113.94

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.

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Performance

Annual Returns

XLV vs. SDY - Annual Returns

YearXLVSDY
202013.33%1.78%
201920.63%23.37%
20186.3%-2.73%
201721.7%15.84%
2016-2.83%20.17%
20156.82%-0.7%
201425.17%13.8%
201341.24%30.09%
201217.56%11.51%
201112.44%7.28%
20102.91%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

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
SDY$10,000$34,80612.44%

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.


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