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XLY vs. VBK: What’s The Difference?

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

The expense ratio of XLY is 0.05 percentage points higher than VBK’s (0.12% vs. 0.07%). XLY also has a higher exposure to the consumer cyclical sector and a lower standard deviation. Overall, XLY has provided higher returns than VBK over the past 11 years.

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

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Summary

XLYVBK
NameConsumer Discretionary Select Sector SPDR FundVanguard Small-Cap Growth Index Fund ETF Shares
CategoryConsumer CyclicalSmall Growth
IssuerSPDR State Street Global AdvisorsVanguard
AUM20.21B37.89B
Avg. Return18.86%16.53%
Div. Yield0.63%0.45%
Expense Ratio0.12%0.07%

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 Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

XLY’s dividend yield is 0.18% higher than that of VBK (0.63% vs. 0.45%). Also, XLY yielded on average 2.34% more per year over the past decade (18.86% vs. 16.53%). The expense ratio of XLY is 0.05 percentage points higher than VBK’s (0.12% vs. 0.07%).

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Fund Composition

Industry Exposure

XLY vs. VBK - Industry Exposure

XLYVBK
Technology0.57%27.87%
Industrials0.0%13.19%
Energy0.0%1.77%
Communication Services0.0%3.24%
Utilities0.0%0.32%
Healthcare0.0%23.24%
Consumer Defensive5.34%3.83%
Real Estate0.0%7.87%
Financial Services0.0%4.05%
Consumer Cyclical94.1%12.13%
Basic Materials0.0%2.49%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

XLY is 81.97% more exposed to the Consumer Cyclical sector than VBK (94.1% vs 12.13%). XLY’s exposure to Consumer Defensive and Technology stocks is 1.51% higher and 27.30% lower respectively (5.34% vs. 3.83% and 0.57% vs. 27.87%). In total, Financial Services, Real Estate, and Healthcare also make up 35.16% less of the fund’s holdings compared to VBK (0.00% vs. 35.16%).

Holdings

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%.

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

XLYVBK
Mean Return1.471.22
R-squared80.8480.56
Std. Deviation15.9717.95
Alpha6.96-2.81
Beta1.021.18
Sharpe Ratio1.060.78
Treynor Ratio16.6911.18

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

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Alpha of -2.81 and a Standard Deviation of 17.95. Its Sharpe Ratio is 0.78 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a Mean Return of 1.22 and a R-squared of 80.56.

XLY’s Mean Return is 0.25 points higher than that of VBK and its R-squared is 0.28 points higher. With a Standard Deviation of 15.97, XLY is slightly less volatile than VBK. The Alpha and Beta of XLY are 9.77 points higher and 0.16 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

XLY vs. VBK - Annual Returns

YearXLYVBK
202029.66%35.29%
201928.43%32.75%
20181.66%-5.68%
201722.77%21.9%
20165.87%10.74%
20159.93%-2.51%
20149.49%4.02%
201342.74%38.18%
201223.6%17.67%
20115.98%-1.43%
201027.36%30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

XLY vs. VBK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLY$10,000$63,06618.86%
VBK$10,000$48,63916.53%

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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

XLY’s CAGR is 2.34 percentage points higher than that of VBK and as a result, would have yielded $14,427 more on a $10,000 investment. Thus, XLY outperformed VBK by 2.34% annually.


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