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.

Summary

XLV XLY
Name Health Care Select Sector SPDR Fund Consumer Discretionary Select Sector SPDR Fund
Category Health Consumer Cyclical
Issuer SPDR State Street Global Advisors SPDR State Street Global Advisors
AUM 27.88B 20.21B
Avg. Return 15.02% 18.86%
Div. Yield 1.4% 0.63%
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 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%.

Fund Composition

Industry Exposure

XLV vs. XLY - Industry Exposure

XLV XLY
Technology 0.0% 0.57%
Industrials 0.0% 0.0%
Energy 0.0% 0.0%
Communication Services 0.0% 0.0%
Utilities 0.0% 0.0%
Healthcare 100.0% 0.0%
Consumer Defensive 0.0% 5.34%
Real Estate 0.0% 0.0%
Financial Services 0.0% 0.0%
Consumer Cyclical 0.0% 94.1%
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 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 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%.

XLY - Holdings

XLY Holdings Weight
Amazon.com Inc 22.9%
Tesla Inc 13.5%
The Home Depot Inc 8.74%
McDonald’s Corp 4.5%
Nike Inc B 4.45%
Lowe’s Companies Inc 3.58%
Starbucks Corp 3.44%
Target Corp 3.12%
Booking Holdings Inc 2.35%
TJX Companies Inc 2.12%

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%.

Risk Analysis

XLV XLY
Mean Return 1.27 1.47
R-squared 58.19 80.84
Std. Deviation 12.94 15.97
Alpha 7.75 6.96
Beta 0.7 1.02
Sharpe Ratio 1.13 1.06
Treynor Ratio 21.1 16.69

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.

Performance

Annual Returns

XLV vs. XLY - Annual Returns

Year XLV XLY
2020 13.33% 29.66%
2019 20.63% 28.43%
2018 6.3% 1.66%
2017 21.7% 22.77%
2016 -2.83% 5.87%
2015 6.82% 9.93%
2014 25.17% 9.49%
2013 41.24% 42.74%
2012 17.56% 23.6%
2011 12.44% 5.98%
2010 2.91% 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

Fund Initial Balance Final Balance CAGR
XLV $10,000 $44,147 15.02%
XLY $10,000 $63,066 18.86%

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.


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