The Health Care Select Sector SPDR Fund (XLV) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between XLV and VXF? And which fund is better?
The expense ratio of XLV is 0.06 percentage points higher than VXF’s (0.12% vs. 0.06%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided lower returns than VXF over the past ten years.
In this article, we’ll compare XLV vs. VXF. We’ll look at holdings and annual returns, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss XLV’s and VXF’s performance, portfolio growth, and industry exposure and examine how these affect their overall returns.
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Summary
| XLV | VXF | |
| Name | Health Care Select Sector SPDR Fund | Vanguard Extended Market Index Fund ETF Shares |
| Category | Health | Mid-Cap Growth |
| Issuer | SPDR State Street Global Advisors | Vanguard |
| AUM | 27.88B | 114.53B |
| Avg. Return | 15.02% | 15.47% |
| Div. Yield | 1.4% | 1.19% |
| Expense Ratio | 0.12% | 0.06% |
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
XLV’s dividend yield is 0.21% higher than that of VXF (1.4% vs. 1.19%). Also, XLV yielded on average 0.45% less per year over the past decade (15.02% vs. 15.47%). The expense ratio of XLV is 0.06 percentage points higher than VXF’s (0.12% vs. 0.06%).
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Fund Composition
Industry Exposure
| XLV | VXF | |
| Technology | 0.0% | 23.61% |
| Industrials | 0.0% | 11.31% |
| Energy | 0.0% | 2.46% |
| Communication Services | 0.0% | 7.29% |
| Utilities | 0.0% | 1.65% |
| Healthcare | 100.0% | 15.25% |
| Consumer Defensive | 0.0% | 3.09% |
| Real Estate | 0.0% | 8.16% |
| Financial Services | 0.0% | 12.56% |
| Consumer Cyclical | 0.0% | 11.35% |
| Basic Materials | 0.0% | 3.26% |
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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
XLV is 84.75% more exposed to the Healthcare sector than VXF (100.0% vs 15.25%). XLV’s exposure to Technology and Industrials stocks is 23.61% lower and 11.31% lower respectively (0.0% vs. 23.61% and 0.0% vs. 11.31%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 32.07% less of the fund’s holdings compared to VXF (0.00% vs. 32.07%).
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%.
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
Risk Analysis
| XLV | VXF | |
| Mean Return | 1.27 | 1.24 |
| R-squared | 58.19 | 85.73 |
| Std. Deviation | 12.94 | 18.04 |
| Alpha | 7.75 | -3.26 |
| Beta | 0.7 | 1.23 |
| Sharpe Ratio | 1.13 | 0.79 |
| Treynor Ratio | 21.1 | 10.92 |
The Health Care Select Sector SPDR Fund (XLV) has a Standard Deviation of 12.94 with a Sharpe Ratio of 1.13 and a Mean Return of 1.27. Its Alpha is 7.75 while XLV’s Beta is 0.7. Furthermore, the fund has a R-squared of 58.19 and a Treynor Ratio of 21.1.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Alpha of -3.26 with a R-squared of 85.73 and a Beta of 1.23. Its Sharpe Ratio is 0.79 while VXF’s Standard Deviation is 18.04. Furthermore, the fund has a Mean Return of 1.24 and a Treynor Ratio of 10.92.
XLV’s Mean Return is 0.03 points higher than that of VXF and its R-squared is 27.54 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than VXF. The Alpha and Beta of XLV are 11.01 points higher and 0.53 points lower than VXF’s Alpha and Beta.
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Performance
Annual Returns
| Year | XLV | VXF |
| 2020 | 13.33% | 32.19% |
| 2019 | 20.63% | 28.04% |
| 2018 | 6.3% | -9.37% |
| 2017 | 21.7% | 18.1% |
| 2016 | -2.83% | 16.16% |
| 2015 | 6.82% | -3.26% |
| 2014 | 25.17% | 7.55% |
| 2013 | 41.24% | 38.37% |
| 2012 | 17.56% | 18.48% |
| 2011 | 12.44% | -3.61% |
| 2010 | 2.91% | 27.55% |
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLV | $10,000 | $44,147 | 15.02% |
| VXF | $10,000 | $44,130 | 15.47% |
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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
XLV’s CAGR is 0.45 percentage points lower than that of VXF and as a result, would have yielded $17 more on a $10,000 investment. Thus, XLV performed worse than VXF by 0.45% annually.
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