XLY vs. SCHG: What’s The Difference?

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

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

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

Summary

XLY SCHG
Name Consumer Discretionary Select Sector SPDR Fund Schwab U.S. Large-Cap Growth ETF
Category Consumer Cyclical Large Growth
Issuer SPDR State Street Global Advisors Schwab ETFs
AUM 20.21B 15.16B
Avg. Return 18.86% 17.81%
Div. Yield 0.63% 0.43%
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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

XLY’s dividend yield is 0.20% higher than that of SCHG (0.63% vs. 0.43%). Also, XLY yielded on average 1.05% more per year over the past decade (18.86% vs. 17.81%). The expense ratio of XLY is 0.08 percentage points higher than SCHG’s (0.12% vs. 0.04%).

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Fund Composition

Industry Exposure

XLY vs. SCHG - Industry Exposure

XLY SCHG
Technology 0.57% 39.21%
Industrials 0.0% 3.01%
Energy 0.0% 0.2%
Communication Services 0.0% 17.07%
Utilities 0.0% 0.0%
Healthcare 0.0% 12.05%
Consumer Defensive 5.34% 2.15%
Real Estate 0.0% 1.64%
Financial Services 0.0% 7.98%
Consumer Cyclical 94.1% 15.01%
Basic Materials 0.0% 1.68%

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. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

XLY is 79.09% more exposed to the Consumer Cyclical sector than SCHG (94.1% vs 15.01%). XLY’s exposure to Consumer Defensive and Technology stocks is 3.19% higher and 38.64% lower respectively (5.34% vs. 2.15% and 0.57% vs. 39.21%). In total, Financial Services, Real Estate, and Healthcare also make up 21.67% less of the fund’s holdings compared to SCHG (0.00% vs. 21.67%).

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%.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

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Risk Analysis

XLY SCHG
Mean Return 1.47 1.46
R-squared 80.84 92.92
Std. Deviation 15.97 14.78
Alpha 6.96 1.97
Beta 1.02 1.05
Sharpe Ratio 1.06 1.14
Treynor Ratio 16.69 16.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Beta of 1.05 with a Treynor Ratio of 16.3 and a Sharpe Ratio of 1.14. Its Mean Return is 1.46 while SCHG’s Alpha is 1.97. Furthermore, the fund has a Standard Deviation of 14.78 and a R-squared of 92.92.

XLY’s Mean Return is 0.01 points higher than that of SCHG and its R-squared is 12.08 points lower. With a Standard Deviation of 15.97, XLY is slightly more volatile than SCHG. The Alpha and Beta of XLY are 4.99 points higher and 0.03 points lower than SCHG’s Alpha and Beta.

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Performance

Annual Returns

XLY vs. SCHG - Annual Returns

Year XLY SCHG
2020 29.66% 39.13%
2019 28.43% 36.21%
2018 1.66% -1.35%
2017 22.77% 28.04%
2016 5.87% 6.76%
2015 9.93% 3.26%
2014 9.49% 15.74%
2013 42.74% 33.96%
2012 23.6% 17.02%
2011 5.98% -0.67%
2010 27.36% 16.83%

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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

XLY vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLY $10,000 $49,518 18.86%
SCHG $10,000 $47,556 17.81%

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 SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.

XLY’s CAGR is 1.05 percentage points higher than that of SCHG and as a result, would have yielded $1,962 more on a $10,000 investment. Thus, XLY outperformed SCHG by 1.05% annually.


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