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XLV vs. VBK: What’s The Difference?

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

The expense ratio of XLV is 0.05 percentage points higher than VBK’s (0.12% vs. 0.07%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided lower returns than VBK over the past ten years.

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

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Summary

XLVVBK
NameHealth Care Select Sector SPDR FundVanguard Small-Cap Growth Index Fund ETF Shares
CategoryHealthSmall Growth
IssuerSPDR State Street Global AdvisorsVanguard
AUM27.88B37.89B
Avg. Return15.02%16.53%
Div. Yield1.4%0.45%
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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

XLV’s dividend yield is 0.95% higher than that of VBK (1.4% vs. 0.45%). Also, XLV yielded on average 1.50% less per year over the past decade (15.02% vs. 16.53%). The expense ratio of XLV is 0.05 percentage points higher than VBK’s (0.12% vs. 0.07%).

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Fund Composition

Industry Exposure

XLV vs. VBK - Industry Exposure

XLVVBK
Technology0.0%27.87%
Industrials0.0%13.19%
Energy0.0%1.77%
Communication Services0.0%3.24%
Utilities0.0%0.32%
Healthcare100.0%23.24%
Consumer Defensive0.0%3.83%
Real Estate0.0%7.87%
Financial Services0.0%4.05%
Consumer Cyclical0.0%12.13%
Basic Materials0.0%2.49%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

XLV is 76.76% more exposed to the Healthcare sector than VBK (100.0% vs 23.24%). XLV’s exposure to Technology and Industrials stocks is 27.87% lower and 13.19% lower respectively (0.0% vs. 27.87% and 0.0% vs. 13.19%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 24.05% less of the fund’s holdings compared to VBK (0.00% vs. 24.05%).

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%.

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

XLVVBK
Mean Return1.271.22
R-squared58.1980.56
Std. Deviation12.9417.95
Alpha7.75-2.81
Beta0.71.18
Sharpe Ratio1.130.78
Treynor Ratio21.111.18

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

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Standard Deviation of 17.95 and a Treynor Ratio of 11.18. Its Mean Return is 1.22 while VBK’s Sharpe Ratio is 0.78. Furthermore, the fund has a R-squared of 80.56 and a Alpha of -2.81.

XLV’s Mean Return is 0.05 points higher than that of VBK and its R-squared is 22.37 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than VBK. The Alpha and Beta of XLV are 10.56 points higher and 0.48 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

XLV vs. VBK - Annual Returns

YearXLVVBK
202013.33%35.29%
201920.63%32.75%
20186.3%-5.68%
201721.7%21.9%
2016-2.83%10.74%
20156.82%-2.51%
201425.17%4.02%
201341.24%38.18%
201217.56%17.67%
201112.44%-1.43%
20102.91%30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

XLV vs. VBK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
VBK$10,000$48,63916.53%

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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

XLV’s CAGR is 1.50 percentage points lower than that of VBK and as a result, would have yielded $4,492 less on a $10,000 investment. Thus, XLV performed worse than VBK by 1.50% annually.


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