Skip to content

XLV vs. XLY: What’s The Difference?

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

XLV and XLY 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 lower returns than XLY over the past ten years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

XLVXLY
NameHealth Care Select Sector SPDR FundConsumer Discretionary Select Sector SPDR Fund
CategoryHealthConsumer Cyclical
IssuerSPDR State Street Global AdvisorsSPDR State Street Global Advisors
AUM27.88B20.21B
Avg. Return15.02%18.86%
Div. Yield1.4%0.63%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% with an expense ratio of 0.12%.

XLV’s dividend yield is 0.77% higher than that of XLY (1.4% vs. 0.63%). Also, XLV yielded on average 3.84% less per year over the past decade (15.02% vs. 18.86%). XLV and XLY have the same expense ratio: 0.12%.

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

XLV vs. XLY - Industry Exposure

XLVXLY
Technology0.0%0.57%
Industrials0.0%0.0%
Energy0.0%0.0%
Communication Services0.0%0.0%
Utilities0.0%0.0%
Healthcare100.0%0.0%
Consumer Defensive0.0%5.34%
Real Estate0.0%0.0%
Financial Services0.0%0.0%
Consumer Cyclical0.0%94.1%
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 Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.

XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.

XLV is 100.00% more exposed to the Healthcare sector than XLY (100.0% vs 0.0%). XLV’s exposure to Technology and Industrials stocks is 0.57% lower and 0.00% lower respectively (0.0% vs. 0.57% and 0.0% vs. 0.0%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 94.10% less of the fund’s holdings compared to XLY (0.00% vs. 94.10%).

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%.

XLY - Holdings

XLY HoldingsWeight
Amazon.com Inc22.9%
Tesla Inc13.5%
The Home Depot Inc8.74%
McDonald’s Corp4.5%
Nike Inc B4.45%
Lowe’s Companies Inc3.58%
Starbucks Corp3.44%
Target Corp3.12%
Booking Holdings Inc2.35%
TJX Companies Inc2.12%

XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.

Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

XLVXLY
Mean Return1.271.47
R-squared58.1980.84
Std. Deviation12.9415.97
Alpha7.756.96
Beta0.71.02
Sharpe Ratio1.131.06
Treynor Ratio21.116.69

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

The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Beta of 1.02 with a Alpha of 6.96 and a R-squared of 80.84. Its Treynor Ratio is 16.69 while XLY’s Sharpe Ratio is 1.06. Furthermore, the fund has a Mean Return of 1.47 and a Standard Deviation of 15.97.

XLV’s Mean Return is 0.20 points lower than that of XLY and its R-squared is 22.65 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than XLY. The Alpha and Beta of XLV are 0.79 points higher and 0.32 points lower than XLY’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

XLV vs. XLY - Annual Returns

YearXLVXLY
202013.33%29.66%
201920.63%28.43%
20186.3%1.66%
201721.7%22.77%
2016-2.83%5.87%
20156.82%9.93%
201425.17%9.49%
201341.24%42.74%
201217.56%23.6%
201112.44%5.98%
20102.91%27.36%

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 XLY, returning 42.74% on an annual basis. The poorest year for XLY in the last ten years was 2018, with a yield of 1.66%. Most years the Consumer Discretionary Select Sector SPDR Fund has given investors modest returns, such as in 2015, 2017, and 2012, when gains were 9.93%, 22.77%, and 23.6% respectively.

Portfolio Growth

XLV vs. XLY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$44,14715.02%
XLY$10,000$63,06618.86%

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 XLY, the end total would have been $63,066. This equates to a $53,066 profit over 11 years and a compound annual growth rate (CAGR) of 18.86%.

XLV’s CAGR is 3.84 percentage points lower than that of XLY and as a result, would have yielded $18,919 less on a $10,000 investment. Thus, XLV performed worse than XLY by 3.84% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.