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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.

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Summary

XLVXLE
NameHealth Care Select Sector SPDR FundEnergy Select Sector SPDR Fund
CategoryHealthEquity Energy
IssuerSPDR State Street Global AdvisorsSPDR State Street Global Advisors
AUM27.88B25.55B
Avg. Return15.02%1.28%
Div. Yield1.4%3.92%
Expense Ratio0.12%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%.

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Fund Composition

Industry Exposure

XLV vs. XLE - Industry Exposure

XLVXLE
Technology0.0%0.0%
Industrials0.0%0.0%
Energy0.0%100.0%
Communication Services0.0%0.0%
Utilities0.0%0.0%
Healthcare100.0%0.0%
Consumer Defensive0.0%0.0%
Real Estate0.0%0.0%
Financial Services0.0%0.0%
Consumer Cyclical0.0%0.0%
Basic Materials0.0%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 HoldingsWeight
Johnson & Johnson9.19%
UnitedHealth Group Inc8.01%
Pfizer Inc4.64%
Abbott Laboratories4.36%
AbbVie Inc4.21%
Thermo Fisher Scientific Inc4.2%
Merck & Co Inc4.17%
Eli Lilly and Co3.87%
Danaher Corp3.61%
Medtronic PLC3.54%

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 HoldingsWeight
Exxon Mobil Corp23.7%
Chevron Corp20.03%
ConocoPhillips4.64%
EOG Resources Inc4.46%
Schlumberger Ltd4.43%
Marathon Petroleum Corp4.17%
Pioneer Natural Resources Co4.08%
Phillips 664.07%
Kinder Morgan Inc Class P3.85%
Williams Companies Inc3.5%

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%.

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Risk Analysis

XLVXLE
Mean Return1.270.32
R-squared58.1961.84
Std. Deviation12.9427.52
Alpha7.75-11.98
Beta0.71.54
Sharpe Ratio1.130.12
Treynor Ratio21.1-0.4

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.

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Performance

Annual Returns

XLV vs. XLE - Annual Returns

YearXLVXLE
202013.33%-32.56%
201920.63%11.87%
20186.3%-18.1%
201721.7%-1.01%
2016-2.83%27.95%
20156.82%-21.47%
201425.17%-8.61%
201341.24%26.16%
201217.56%5.17%
201112.44%2.98%
20102.91%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

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
XLE$10,000$9,3391.28%

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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