XLY vs. SCHA: What’s The Difference?

The Consumer Discretionary Select Sector SPDR Fund (XLY) and the Schwab U.S. Small-Cap ETF (SCHA) are both among the Top 100 ETFs. XLY is a SPDR State Street Global Advisors Consumer Cyclical fund and SCHA is a Schwab ETFs Small Blend fund. So, what’s the difference between XLY and SCHA? And which fund is better?

The expense ratio of XLY is 0.08 percentage points higher than SCHA’s (0.12% vs. 0.04%). XLY also has a higher exposure to the consumer cyclical sector and a lower standard deviation. Overall, XLY has provided higher returns than SCHA over the past 10 years.

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

Summary

XLY SCHA
Name Consumer Discretionary Select Sector SPDR Fund Schwab U.S. Small-Cap ETF
Category Consumer Cyclical Small Blend
Issuer SPDR State Street Global Advisors Schwab ETFs
AUM 20.21B 16.51B
Avg. Return 18.86% 12.62%
Div. Yield 0.63% 0.98%
Expense Ratio 0.12% 0.04%

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 Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.

XLY’s dividend yield is 0.35% lower than that of SCHA (0.63% vs. 0.98%). Also, XLY yielded on average 6.24% more per year over the past decade (18.86% vs. 12.62%). The expense ratio of XLY is 0.08 percentage points higher than SCHA’s (0.12% vs. 0.04%).

Fund Composition

Industry Exposure

XLY vs. SCHA - Industry Exposure

XLY SCHA
Technology 0.57% 14.91%
Industrials 0.0% 15.37%
Energy 0.0% 3.35%
Communication Services 0.0% 3.5%
Utilities 0.0% 1.83%
Healthcare 0.0% 16.5%
Consumer Defensive 5.34% 3.75%
Real Estate 0.0% 7.83%
Financial Services 0.0% 14.49%
Consumer Cyclical 94.1% 14.48%
Basic Materials 0.0% 3.98%

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%.

The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.

SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.

XLY is 79.62% more exposed to the Consumer Cyclical sector than SCHA (94.1% vs 14.48%). XLY’s exposure to Consumer Defensive and Technology stocks is 1.59% higher and 14.34% lower respectively (5.34% vs. 3.75% and 0.57% vs. 14.91%). In total, Financial Services, Real Estate, and Healthcare also make up 38.82% less of the fund’s holdings compared to SCHA (0.00% vs. 38.82%).

Holdings

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%.

SCHA - Holdings

SCHA Holdings Weight
AMC Entertainment Holdings Inc Class A 0.67%
Caesars Entertainment Inc 0.51%
Cloudflare Inc 0.48%
NovoCure Ltd 0.45%
Plug Power Inc 0.41%
10x Genomics Inc Ordinary Shares – Class A 0.34%
GameStop Corp Class A 0.28%
RH 0.27%
Penn National Gaming Inc 0.27%
Axon Enterprise Inc 0.27%

SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.

10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.

Risk Analysis

XLY SCHA
Mean Return 1.47 1.14
R-squared 80.84 82.26
Std. Deviation 15.97 18.68
Alpha 6.96 -4.65
Beta 1.02 1.25
Sharpe Ratio 1.06 0.7
Treynor Ratio 16.69 9.62

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

The Schwab U.S. Small-Cap ETF (SCHA) has a Alpha of -4.65 with a Beta of 1.25 and a Standard Deviation of 18.68. Its Sharpe Ratio is 0.7 while SCHA’s Mean Return is 1.14. Furthermore, the fund has a R-squared of 82.26 and a Treynor Ratio of 9.62.

XLY’s Mean Return is 0.33 points higher than that of SCHA and its R-squared is 1.42 points lower. With a Standard Deviation of 15.97, XLY is slightly less volatile than SCHA. The Alpha and Beta of XLY are 11.61 points higher and 0.23 points lower than SCHA’s Alpha and Beta.

Performance

Annual Returns

XLY vs. SCHA - Annual Returns

Year XLY SCHA
2020 29.66% 19.35%
2019 28.43% 26.54%
2018 1.66% -11.75%
2017 22.77% 15.04%
2016 5.87% 19.88%
2015 9.93% -4.24%
2014 9.49% 6.53%
2013 42.74% 39.59%
2012 23.6% 18.24%
2011 5.98% -2.95%
2010 27.36% 28.31%

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 2013 was the strongest year for SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.

Portfolio Growth

XLY vs. SCHA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLY $10,000 $49,518 18.86%
SCHA $10,000 $30,035 12.62%

A $10,000 investment in XLY would have resulted in a final balance of $49,518. This is a profit of $39,518 over 10 years and amounts to a compound annual growth rate (CAGR) of 18.86%.

With a $10,000 investment in SCHA, the end total would have been $30,035. This equates to a $20,035 profit over 10 years and a compound annual growth rate (CAGR) of 12.62%.

XLY’s CAGR is 6.24 percentage points higher than that of SCHA and as a result, would have yielded $19,483 more on a $10,000 investment. Thus, XLY outperformed SCHA by 6.24% annually.


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