XLV vs. XLE: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the Energy Select Sector SPDR Fund (XLE) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and XLE is a SPDR State Street Global Advisors Equity Energy fund. So, what’s the difference between XLV and XLE? And which fund is better?

XLV and XLE have the same expense ratio: 0.12%. XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided higher returns than XLE over the past ten years.

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

Summary

XLV XLE
Name Health Care Select Sector SPDR Fund Energy Select Sector SPDR Fund
Category Health Equity Energy
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 27.88B 25.55B
Avg. Return 15.02% 1.28%
Div. Yield 1.4% 3.92%
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 Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.

XLV’s dividend yield is 2.52% lower than that of XLE (1.4% vs. 3.92%). Also, XLV yielded on average 13.74% more per year over the past decade (15.02% vs. 1.28%). XLV and XLE have the same expense ratio: 0.12%.

Fund Composition

Industry Exposure

XLV vs. XLE - Industry Exposure

XLV XLE
Technology 0.0% 0.0%
Industrials 0.0% 0.0%
Energy 0.0% 100.0%
Communication Services 0.0% 0.0%
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 Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy 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.

XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, 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 XLE (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 XLE (0.00% vs. 0.00%).

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%.

XLE - Holdings

XLE Holdings Weight
Exxon Mobil Corp 23.7%
Chevron Corp 20.03%
ConocoPhillips 4.64%
EOG Resources Inc 4.46%
Schlumberger Ltd 4.43%
Marathon Petroleum Corp 4.17%
Pioneer Natural Resources Co 4.08%
Phillips 66 4.07%
Kinder Morgan Inc Class P 3.85%
Williams Companies Inc 3.5%

XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.

Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.

Risk Analysis

XLV XLE
Mean Return 1.27 0.32
R-squared 58.19 61.84
Std. Deviation 12.94 27.52
Alpha 7.75 -11.98
Beta 0.7 1.54
Sharpe Ratio 1.13 0.12
Treynor Ratio 21.1 -0.4

The Health Care Select Sector SPDR Fund (XLV) has a Standard Deviation of 12.94 with a Treynor Ratio of 21.1 and a Beta of 0.7. Its Mean Return is 1.27 while XLV’s R-squared is 58.19. Furthermore, the fund has a Alpha of 7.75 and a Sharpe Ratio of 1.13.

The Energy Select Sector SPDR Fund (XLE) has a Mean Return of 0.32 with a Treynor Ratio of -0.4 and a R-squared of 61.84. Its Standard Deviation is 27.52 while XLE’s Sharpe Ratio is 0.12. Furthermore, the fund has a Alpha of -11.98 and a Beta of 1.54.

XLV’s Mean Return is 0.95 points higher than that of XLE and its R-squared is 3.65 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than XLE. The Alpha and Beta of XLV are 19.73 points higher and 0.84 points lower than XLE’s Alpha and Beta.

Performance

Annual Returns

XLV vs. XLE - Annual Returns

Year XLV XLE
2020 13.33% -32.56%
2019 20.63% 11.87%
2018 6.3% -18.1%
2017 21.7% -1.01%
2016 -2.83% 27.95%
2015 6.82% -21.47%
2014 25.17% -8.61%
2013 41.24% 26.16%
2012 17.56% 5.17%
2011 12.44% 2.98%
2010 2.91% 21.7%

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 2016 was the strongest year for XLE, returning 27.95% on an annual basis. The poorest year for XLE in the last ten years was 2020, with a yield of -32.56%. Most years the Energy Select Sector SPDR Fund has given investors modest returns, such as in 2017, 2011, and 2012, when gains were -1.01%, 2.98%, and 5.17% respectively.

Portfolio Growth

XLV vs. XLE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
XLE $10,000 $9,339 1.28%

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 XLE, the end total would have been $9,339. This equates to a $-661 profit over 11 years and a compound annual growth rate (CAGR) of 1.28%.

XLV’s CAGR is 13.74 percentage points higher than that of XLE and as a result, would have yielded $34,808 more on a $10,000 investment. Thus, XLV outperformed XLE by 13.74% annually.


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