The Health Care Select Sector SPDR Fund (XLV) and the Vanguard Large-Cap Index Fund ETF Shares (VV) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and VV is a Vanguard Large Blend fund. So, what’s the difference between XLV and VV? And which fund is better?
The expense ratio of XLV is 0.08 percentage points higher than VV’s (0.12% vs. 0.04%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than VV over the past ten years.
In this article, we’ll compare XLV vs. VV. We’ll look at fund composition and portfolio growth, as well as at their industry exposure and performance. Moreover, I’ll also discuss XLV’s and VV’s risk metrics, annual returns, and holdings and examine how these affect their overall returns.
Summary
| XLV | VV | |
| Name | Health Care Select Sector SPDR Fund | Vanguard Large-Cap Index Fund ETF Shares |
| Category | Health | Large Blend |
| Issuer | SPDR State Street Global Advisors | Vanguard |
| AUM | 27.88B | 37.65B |
| Avg. Return | 15.02% | 14.75% |
| Div. Yield | 1.4% | 1.26% |
| Expense Ratio | 0.12% | 0.04% |
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 Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.
XLV’s dividend yield is 0.14% higher than that of VV (1.4% vs. 1.26%). Also, XLV yielded on average 0.28% more per year over the past decade (15.02% vs. 14.75%). The expense ratio of XLV is 0.08 percentage points higher than VV’s (0.12% vs. 0.04%).
Fund Composition
Industry Exposure
| XLV | VV | |
| Technology | 0.0% | 25.38% |
| Industrials | 0.0% | 8.39% |
| Energy | 0.0% | 2.62% |
| Communication Services | 0.0% | 11.68% |
| Utilities | 0.0% | 2.35% |
| Healthcare | 100.0% | 13.22% |
| Consumer Defensive | 0.0% | 6.06% |
| Real Estate | 0.0% | 2.7% |
| Financial Services | 0.0% | 13.82% |
| Consumer Cyclical | 0.0% | 11.65% |
| Basic Materials | 0.0% | 2.13% |
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 Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.
VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.
XLV is 86.78% more exposed to the Healthcare sector than VV (100.0% vs 13.22%). XLV’s exposure to Technology and Industrials stocks is 25.38% lower and 8.39% lower respectively (0.0% vs. 25.38% and 0.0% vs. 8.39%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 28.17% less of the fund’s holdings compared to VV (0.00% vs. 28.17%).
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%.
| VV Holdings | Weight |
| Apple Inc | 5.7% |
| Microsoft Corp | 5.35% |
| Amazon.com Inc | 3.87% |
| Facebook Inc Class A | 2.19% |
| Alphabet Inc Class A | 1.93% |
| Alphabet Inc Class C | 1.81% |
| Tesla Inc | 1.37% |
| Berkshire Hathaway Inc Class B | 1.3% |
| NVIDIA Corp | 1.24% |
| JPMorgan Chase & Co | 1.24% |
VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.
Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.
Risk Analysis
| XLV | VV | |
| Mean Return | 1.27 | 1.24 |
| R-squared | 58.19 | 99.86 |
| Std. Deviation | 12.94 | 13.75 |
| Alpha | 7.75 | -0.08 |
| Beta | 0.7 | 1.01 |
| Sharpe Ratio | 1.13 | 1.04 |
| Treynor Ratio | 21.1 | 14.14 |
The Health Care Select Sector SPDR Fund (XLV) has a Alpha of 7.75 with a Beta of 0.7 and a Sharpe Ratio of 1.13. Its R-squared is 58.19 while XLV’s Mean Return is 1.27. Furthermore, the fund has a Standard Deviation of 12.94 and a Treynor Ratio of 21.1.
The Vanguard Large-Cap Index Fund ETF Shares (VV) has a R-squared of 99.86 with a Alpha of -0.08 and a Sharpe Ratio of 1.04. Its Treynor Ratio is 14.14 while VV’s Beta is 1.01. Furthermore, the fund has a Mean Return of 1.24 and a Standard Deviation of 13.75.
XLV’s Mean Return is 0.03 points higher than that of VV and its R-squared is 41.67 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than VV. The Alpha and Beta of XLV are 7.83 points higher and 0.31 points lower than VV’s Alpha and Beta.
Performance
Annual Returns
| Year | XLV | VV |
| 2020 | 13.33% | 20.99% |
| 2019 | 20.63% | 31.39% |
| 2018 | 6.3% | -4.44% |
| 2017 | 21.7% | 22.03% |
| 2016 | -2.83% | 11.65% |
| 2015 | 6.82% | 1.07% |
| 2014 | 25.17% | 13.39% |
| 2013 | 41.24% | 32.65% |
| 2012 | 17.56% | 16.09% |
| 2011 | 12.44% | 1.58% |
| 2010 | 2.91% | 15.81% |
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 VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLV | $10,000 | $44,147 | 15.02% |
| VV | $10,000 | $42,970 | 14.75% |
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 VV, the end total would have been $42,970. This equates to a $32,970 profit over 11 years and a compound annual growth rate (CAGR) of 14.75%.
XLV’s CAGR is 0.28 percentage points higher than that of VV and as a result, would have yielded $1,177 more on a $10,000 investment. Thus, XLV outperformed VV by 0.28% annually.
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