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XLV vs. VLUE: What’s The Difference?

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

The expense ratio of XLV is 0.03 percentage points lower than VLUE’s (0.12% vs. 0.15%). XLV also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, XLV has provided higher returns than VLUE over the past ten years.

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

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Summary

XLVVLUE
NameHealth Care Select Sector SPDR FundiShares MSCI USA Value Factor ETF
CategoryHealthLarge Value
IssuerSPDR State Street Global AdvisorsiShares
AUM27.88B15.95B
Avg. Return15.02%8.91%
Div. Yield1.4%1.89%
Expense Ratio0.12%0.15%

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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

XLV’s dividend yield is 0.49% lower than that of VLUE (1.4% vs. 1.89%). Also, XLV yielded on average 6.11% more per year over the past decade (15.02% vs. 8.91%). The expense ratio of XLV is 0.03 percentage points lower than VLUE’s (0.12% vs. 0.15%).

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Fund Composition

Industry Exposure

XLV vs. VLUE - Industry Exposure

XLVVLUE
Technology0.0%26.89%
Industrials0.0%9.14%
Energy0.0%2.42%
Communication Services0.0%10.39%
Utilities0.0%2.68%
Healthcare100.0%14.31%
Consumer Defensive0.0%7.22%
Real Estate0.0%3.19%
Financial Services0.0%10.96%
Consumer Cyclical0.0%10.66%
Basic Materials0.0%2.14%

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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

XLV is 85.69% more exposed to the Healthcare sector than VLUE (100.0% vs 14.31%). XLV’s exposure to Technology and Industrials stocks is 26.89% lower and 9.14% lower respectively (0.0% vs. 26.89% and 0.0% vs. 9.14%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 24.81% less of the fund’s holdings compared to VLUE (0.00% vs. 24.81%).

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%.

VLUE - Holdings

VLUE HoldingsWeight
AT&T Inc7.13%
Intel Corp6.14%
General Motors Co3.19%
Micron Technology Inc3.14%
Cisco Systems Inc3.05%
International Business Machines Corp2.76%
Target Corp2.38%
Citigroup Inc2.32%
Ford Motor Co2.23%
Pfizer Inc2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

XLVVLUE
Mean Return1.270
R-squared58.190
Std. Deviation12.940
Alpha7.750
Beta0.70
Sharpe Ratio1.130
Treynor Ratio21.10

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

The iShares MSCI USA Value Factor ETF (VLUE) has a Alpha of 0 with a Mean Return of 0 and a R-squared of 0. Its Sharpe Ratio is 0 while VLUE’s Standard Deviation is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.

XLV’s Mean Return is 1.27 points higher than that of VLUE and its R-squared is 58.19 points higher. With a Standard Deviation of 12.94, XLV is slightly more volatile than VLUE. The Alpha and Beta of XLV are 7.75 points higher and 0.70 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

XLV vs. VLUE - Annual Returns

YearXLVVLUE
202013.33%-0.32%
201920.63%27.47%
20186.3%-11.18%
201721.7%21.97%
2016-2.83%15.68%
20156.82%-3.54%
201425.17%12.29%
201341.24%0.0%
201217.56%0.0%
201112.44%0.0%
20102.91%0.0%

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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

XLV vs. VLUE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$22,97715.02%
VLUE$10,000$17,2478.91%

A $10,000 investment in XLV would have resulted in a final balance of $22,977. This is a profit of $12,977 over 7 years and amounts to a compound annual growth rate (CAGR) of 15.02%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

XLV’s CAGR is 6.11 percentage points higher than that of VLUE and as a result, would have yielded $5,730 more on a $10,000 investment. Thus, XLV outperformed VLUE by 6.11% annually.


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