The Consumer Discretionary Select Sector SPDR Fund (XLY) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. XLY is a SPDR State Street Global Advisors Consumer Cyclical fund and VLUE is a iShares Large Value fund. So, what’s the difference between XLY and VLUE? And which fund is better?
The expense ratio of XLY is 0.03 percentage points lower than VLUE’s (0.12% vs. 0.15%). XLY also has a higher exposure to the consumer cyclical sector and a higher standard deviation. Overall, XLY has provided higher returns than VLUE over the past 7 years.
In this article, we’ll compare XLY vs. VLUE. We’ll look at performance and industry exposure, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss XLY’s and VLUE’s fund composition, annual returns, and risk metrics and examine how these affect their overall returns.
|Name||Consumer Discretionary Select Sector SPDR Fund||iShares MSCI USA Value Factor ETF|
|Category||Consumer Cyclical||Large Value|
|Issuer||SPDR State Street Global Advisors||iShares|
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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
XLY’s dividend yield is 1.26% lower than that of VLUE (0.63% vs. 1.89%). Also, XLY yielded on average 9.95% more per year over the past decade (18.86% vs. 8.91%). The expense ratio of XLY is 0.03 percentage points lower than VLUE’s (0.12% vs. 0.15%).
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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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
XLY is 83.44% more exposed to the Consumer Cyclical sector than VLUE (94.1% vs 10.66%). XLY’s exposure to Consumer Defensive and Technology stocks is 1.88% lower and 26.32% lower respectively (5.34% vs. 7.22% and 0.57% vs. 26.89%). In total, Financial Services, Real Estate, and Healthcare also make up 28.46% less of the fund’s holdings compared to VLUE (0.00% vs. 28.46%).
|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%.
|General Motors Co||3.19%|
|Micron Technology Inc||3.14%|
|Cisco Systems Inc||3.05%|
|International Business Machines Corp||2.76%|
|Ford Motor Co||2.23%|
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
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The Consumer Discretionary Select Sector SPDR Fund (XLY) has a R-squared of 80.84 with a Beta of 1.02 and a Alpha of 6.96. Its Sharpe Ratio is 1.06 while XLY’s Standard Deviation is 15.97. Furthermore, the fund has a Mean Return of 1.47 and a Treynor Ratio of 16.69.
The iShares MSCI USA Value Factor ETF (VLUE) has a Beta of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Treynor Ratio is 0 while VLUE’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Alpha of 0.
XLY’s Mean Return is 1.47 points higher than that of VLUE and its R-squared is 80.84 points higher. With a Standard Deviation of 15.97, XLY is slightly more volatile than VLUE. The Alpha and Beta of XLY are 6.96 points higher and 1.02 points higher than VLUE’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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in XLY would have resulted in a final balance of $26,483. This is a profit of $16,483 over 7 years and amounts to a compound annual growth rate (CAGR) of 18.86%.
With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.
XLY’s CAGR is 9.95 percentage points higher than that of VLUE and as a result, would have yielded $9,236 more on a $10,000 investment. Thus, XLY outperformed VLUE by 9.95% annually.
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