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.

Summary

XLV VLUE
Name Health Care Select Sector SPDR Fund iShares MSCI USA Value Factor ETF
Category Health Large Value
Issuer SPDR State Street Global Advisors iShares
AUM 27.88B 15.95B
Avg. Return 15.02% 8.91%
Div. Yield 1.4% 1.89%
Expense Ratio 0.12% 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%).

Fund Composition

Industry Exposure

XLV vs. VLUE - Industry Exposure

XLV VLUE
Technology 0.0% 26.89%
Industrials 0.0% 9.14%
Energy 0.0% 2.42%
Communication Services 0.0% 10.39%
Utilities 0.0% 2.68%
Healthcare 100.0% 14.31%
Consumer Defensive 0.0% 7.22%
Real Estate 0.0% 3.19%
Financial Services 0.0% 10.96%
Consumer Cyclical 0.0% 10.66%
Basic Materials 0.0% 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 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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

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%.

Risk Analysis

XLV VLUE
Mean Return 1.27 0
R-squared 58.19 0
Std. Deviation 12.94 0
Alpha 7.75 0
Beta 0.7 0
Sharpe Ratio 1.13 0
Treynor Ratio 21.1 0

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.

Performance

Annual Returns

XLV vs. VLUE - Annual Returns

Year XLV VLUE
2020 13.33% -0.32%
2019 20.63% 27.47%
2018 6.3% -11.18%
2017 21.7% 21.97%
2016 -2.83% 15.68%
2015 6.82% -3.54%
2014 25.17% 12.29%
2013 41.24% 0.0%
2012 17.56% 0.0%
2011 12.44% 0.0%
2010 2.91% 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

Fund Initial Balance Final Balance CAGR
XLV $10,000 $22,977 15.02%
VLUE $10,000 $17,247 8.91%

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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