XLV vs. VOE: What’s The Difference?

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

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

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

Summary

XLV VOE
Name Health Care Select Sector SPDR Fund Vanguard Mid-Cap Value Index Fund ETF Shares
Category Health Mid-Cap Value
Issuer SPDR State Street Global Advisors Vanguard
AUM 27.88B 26.78B
Avg. Return 15.02% 12.52%
Div. Yield 1.4% 1.87%
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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

XLV’s dividend yield is 0.47% lower than that of VOE (1.4% vs. 1.87%). Also, XLV yielded on average 2.50% more per year over the past decade (15.02% vs. 12.52%). The expense ratio of XLV is 0.05 percentage points higher than VOE’s (0.12% vs. 0.07%).

Fund Composition

Industry Exposure

XLV vs. VOE - Industry Exposure

XLV VOE
Technology 0.0% 9.85%
Industrials 0.0% 9.4%
Energy 0.0% 5.69%
Communication Services 0.0% 5.27%
Utilities 0.0% 10.93%
Healthcare 100.0% 7.04%
Consumer Defensive 0.0% 4.85%
Real Estate 0.0% 11.48%
Financial Services 0.0% 18.26%
Consumer Cyclical 0.0% 11.8%
Basic Materials 0.0% 5.44%

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 Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

XLV is 92.96% more exposed to the Healthcare sector than VOE (100.0% vs 7.04%). XLV’s exposure to Technology and Industrials stocks is 9.85% lower and 9.40% lower respectively (0.0% vs. 9.85% and 0.0% vs. 9.4%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 41.54% less of the fund’s holdings compared to VOE (0.00% vs. 41.54%).

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%.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

Risk Analysis

XLV VOE
Mean Return 1.27 1.05
R-squared 58.19 88.76
Std. Deviation 12.94 15.98
Alpha 7.75 -3.77
Beta 0.7 1.11
Sharpe Ratio 1.13 0.75
Treynor Ratio 21.1 10.19

The Health Care Select Sector SPDR Fund (XLV) has a Mean Return of 1.27 with a Beta of 0.7 and a Alpha of 7.75. 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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Beta of 1.11 with a Treynor Ratio of 10.19 and a Sharpe Ratio of 0.75. Its Alpha is -3.77 while VOE’s Mean Return is 1.05. Furthermore, the fund has a Standard Deviation of 15.98 and a R-squared of 88.76.

XLV’s Mean Return is 0.22 points higher than that of VOE and its R-squared is 30.57 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than VOE. The Alpha and Beta of XLV are 11.52 points higher and 0.41 points lower than VOE’s Alpha and Beta.

Performance

Annual Returns

XLV vs. VOE - Annual Returns

Year XLV VOE
2020 13.33% 2.5%
2019 20.63% 27.98%
2018 6.3% -12.41%
2017 21.7% 17.05%
2016 -2.83% 15.26%
2015 6.82% -1.8%
2014 25.17% 13.98%
2013 41.24% 37.65%
2012 17.56% 16.04%
2011 12.44% -0.32%
2010 2.91% 21.83%

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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

XLV vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
VOE $10,000 $33,655 12.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

XLV’s CAGR is 2.50 percentage points higher than that of VOE and as a result, would have yielded $10,492 more on a $10,000 investment. Thus, XLV outperformed VOE by 2.50% annually.


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