The Health Care Select Sector SPDR Fund (XLV) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between XLV and XLC? And which fund is better?
XLV and XLC have the same expense ratio: 0.12%. XLV also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, XLV has provided lower returns than XLC over the past ten years.
In this article, we’ll compare XLV vs. XLC. We’ll look at industry exposure and portfolio growth, as well as at their annual returns and performance. Moreover, I’ll also discuss XLV’s and XLC’s risk metrics, holdings, and fund composition and examine how these affect their overall returns.
Summary
| XLV | XLC | |
| Name | Health Care Select Sector SPDR Fund | Communication Services Select Sector SPDR Fund |
| Category | Health | Communications |
| Issuer | SPDR State Street Global Advisors | SPDR State Street Global Advisors |
| AUM | 27.88B | 14.09B |
| Avg. Return | 15.02% | 29.04% |
| Div. Yield | 1.4% | 0.62% |
| Expense Ratio | 0.12% | 0.12% |
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 Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
XLV’s dividend yield is 0.78% higher than that of XLC (1.4% vs. 0.62%). Also, XLV yielded on average 14.01% less per year over the past decade (15.02% vs. 29.04%). XLV and XLC have the same expense ratio: 0.12%.
Fund Composition
Industry Exposure
| XLV | XLC | |
| Technology | 0.0% | 0.0% |
| Industrials | 0.0% | 0.0% |
| Energy | 0.0% | 0.0% |
| Communication Services | 0.0% | 100.0% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 100.0% | 0.0% |
| Consumer Defensive | 0.0% | 0.0% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 0.0% | 0.0% |
| Consumer Cyclical | 0.0% | 0.0% |
| Basic Materials | 0.0% | 0.0% |
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 Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services 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.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
XLV is 100.00% more exposed to the Healthcare sector than XLC (100.0% vs 0.0%). XLV’s exposure to Technology and Industrials stocks is 0.00% lower and 0.00% lower respectively (0.0% vs. 0.0% and 0.0% vs. 0.0%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 0.00% less of the fund’s holdings compared to XLC (0.00% vs. 0.00%).
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%.
| XLC Holdings | Weight |
| Facebook Inc A | 23.75% |
| Alphabet Inc A | 11.49% |
| Alphabet Inc Class C | 11.16% |
| Netflix Inc | 4.78% |
| Charter Communications Inc A | 4.65% |
| Comcast Corp Class A | 4.44% |
| T-Mobile US Inc | 4.41% |
| The Walt Disney Co | 4.39% |
| AT&T Inc | 4.35% |
| Verizon Communications Inc | 4.33% |
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
Risk Analysis
| XLV | XLC | |
| 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 Mean Return of 1.27 with a Standard Deviation of 12.94 and a Sharpe Ratio of 1.13. Its Treynor Ratio is 21.1 while XLV’s R-squared is 58.19. Furthermore, the fund has a Alpha of 7.75 and a Beta of 0.7.
The Communication Services Select Sector SPDR Fund (XLC) has a Sharpe Ratio of 0 with a Alpha of 0 and a R-squared of 0. Its Treynor Ratio is 0 while XLC’s Beta is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.
XLV’s Mean Return is 1.27 points higher than that of XLC and its R-squared is 58.19 points higher. With a Standard Deviation of 12.94, XLV is slightly more volatile than XLC. The Alpha and Beta of XLV are 7.75 points higher and 0.70 points higher than XLC’s Alpha and Beta.
Performance
Annual Returns
| Year | XLV | XLC |
| 2020 | 13.33% | 26.85% |
| 2019 | 20.63% | 31.22% |
| 2018 | 6.3% | 0.0% |
| 2017 | 21.7% | 0.0% |
| 2016 | -2.83% | 0.0% |
| 2015 | 6.82% | 0.0% |
| 2014 | 25.17% | 0.0% |
| 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 XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| XLV | $10,000 | $13,670 | 15.02% |
| XLC | $10,000 | $16,645 | 29.04% |
A $10,000 investment in XLV would have resulted in a final balance of $13,670. This is a profit of $3,670 over 2 years and amounts to a compound annual growth rate (CAGR) of 15.02%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
XLV’s CAGR is 14.01 percentage points lower than that of XLC and as a result, would have yielded $2,975 less on a $10,000 investment. Thus, XLV performed worse than XLC by 14.01% annually.
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