The Consumer Discretionary Select Sector SPDR Fund (XLY) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. XLY is a SPDR State Street Global Advisors Consumer Cyclical fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between XLY and BIV? And which fund is better?
The expense ratio of XLY is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%). XLY also has a high exposure to the consumer cyclical sector while BIV is mostly comprised of AAA bonds. Overall, XLY has provided higher returns than BIV over the past 11 years.
In this article, we’ll compare XLY vs. BIV. We’ll look at risk metrics and holdings, as well as at their fund composition and performance. Moreover, I’ll also discuss XLY’s and BIV’s industry exposure, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Consumer Discretionary Select Sector SPDR Fund||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Consumer Cyclical||Intermediate-Term Bond|
|Issuer||SPDR State Street Global Advisors||Vanguard|
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%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
XLY’s dividend yield is 1.43% lower than that of BIV (0.63% vs. 2.06%). Also, XLY yielded on average 13.55% more per year over the past decade (18.86% vs. 5.31%). The expense ratio of XLY is 0.07 percentage points higher than BIV’s (0.12% vs. 0.05%).
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|The Home Depot Inc||8.74%|
|Nike Inc B||4.45%|
|Lowe’s Companies Inc||3.58%|
|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%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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The Consumer Discretionary Select Sector SPDR Fund (XLY) has a Alpha of 6.96 with a Mean Return of 1.47 and a Beta of 1.02. Its Treynor Ratio is 16.69 while XLY’s Sharpe Ratio is 1.06. Furthermore, the fund has a R-squared of 80.84 and a Standard Deviation of 15.97.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Sharpe Ratio of 0.89 with a Standard Deviation of 4.09 and a Beta of 1.33. Its Mean Return is 0.35 while BIV’s Treynor Ratio is 2.72. Furthermore, the fund has a Alpha of -0.07 and a R-squared of 95.12.
XLY’s Mean Return is 1.12 points higher than that of BIV and its R-squared is 14.28 points lower. With a Standard Deviation of 15.97, XLY is slightly more volatile than BIV. The Alpha and Beta of XLY are 7.03 points higher and 0.31 points lower than BIV’s Alpha and Beta.
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XLY had its best year in 2013 with an annual return of 42.74%. XLY’s worst year over the past decade yielded 1.66% and occurred in 2018. In most years the Consumer Discretionary Select Sector SPDR Fund provided moderate returns such as in 2015, 2017, and 2012 where annual returns amounted to 9.93%, 22.77%, and 23.6% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in XLY would have resulted in a final balance of $63,066. This is a profit of $53,066 over 11 years and amounts to a compound annual growth rate (CAGR) of 18.86%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
XLY’s CAGR is 13.55 percentage points higher than that of BIV and as a result, would have yielded $45,574 more on a $10,000 investment. Thus, XLY outperformed BIV by 13.55% annually.
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