XLV vs. VBR: What’s The Difference?

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

The expense ratio of XLV is 0.05 percentage points higher than VBR’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 higher returns than VBR over the past ten years.

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

Summary

XLV VBR
Name Health Care Select Sector SPDR Fund Vanguard Small-Cap Value Index Fund ETF Shares
Category Health Small Value
Issuer SPDR State Street Global Advisors Vanguard
AUM 27.88B 48.08B
Avg. Return 15.02% 12.28%
Div. Yield 1.4% 1.6%
Expense Ratio 0.12% 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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

XLV’s dividend yield is 0.20% lower than that of VBR (1.4% vs. 1.6%). Also, XLV yielded on average 2.74% more per year over the past decade (15.02% vs. 12.28%). The expense ratio of XLV is 0.05 percentage points higher than VBR’s (0.12% vs. 0.07%).

Fund Composition

Industry Exposure

XLV vs. VBR - Industry Exposure

XLV VBR
Technology 0.0% 8.39%
Industrials 0.0% 18.44%
Energy 0.0% 5.15%
Communication Services 0.0% 1.77%
Utilities 0.0% 3.65%
Healthcare 100.0% 7.16%
Consumer Defensive 0.0% 4.36%
Real Estate 0.0% 10.92%
Financial Services 0.0% 20.04%
Consumer Cyclical 0.0% 13.82%
Basic Materials 0.0% 6.31%

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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

XLV is 92.84% more exposed to the Healthcare sector than VBR (100.0% vs 7.16%). XLV’s exposure to Technology and Industrials stocks is 8.39% lower and 18.44% lower respectively (0.0% vs. 8.39% and 0.0% vs. 18.44%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 44.78% less of the fund’s holdings compared to VBR (0.00% vs. 44.78%).

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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

XLV VBR
Mean Return 1.27 1.08
R-squared 58.19 82.2
Std. Deviation 12.94 18.37
Alpha 7.75 -5.09
Beta 0.7 1.23
Sharpe Ratio 1.13 0.67
Treynor Ratio 21.1 9.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a R-squared of 82.2 with a Sharpe Ratio of 0.67 and a Standard Deviation of 18.37. Its Mean Return is 1.08 while VBR’s Alpha is -5.09. Furthermore, the fund has a Treynor Ratio of 9.15 and a Beta of 1.23.

XLV’s Mean Return is 0.19 points higher than that of VBR and its R-squared is 24.01 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than VBR. The Alpha and Beta of XLV are 12.84 points higher and 0.53 points lower than VBR’s Alpha and Beta.

Performance

Annual Returns

XLV vs. VBR - Annual Returns

Year XLV VBR
2020 13.33% 5.82%
2019 20.63% 22.76%
2018 6.3% -12.22%
2017 21.7% 11.79%
2016 -2.83% 24.8%
2015 6.82% -4.67%
2014 25.17% 10.55%
2013 41.24% 36.57%
2012 17.56% 18.78%
2011 12.44% -4.05%
2010 2.91% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

XLV vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
VBR $10,000 $32,611 12.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

XLV’s CAGR is 2.74 percentage points higher than that of VBR and as a result, would have yielded $11,536 more on a $10,000 investment. Thus, XLV outperformed VBR by 2.74% annually.


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