SPY vs XLB
State Street SPDR S&P 500 ETF Trust vs State Street Materials Select Sector SPDR ETF
Quick Verdict
XLB has a lower expense ratio. SPY delivered stronger 1-year returns. SPY offers more diversification with 505 holdings.
Side-by-Side Comparison
| Metric | SPY | XLB | Winner |
|---|---|---|---|
| Expense Ratio | 0.09% | 0.08% | |
| AUM | $821.1B | $8.7B | |
| Dividend Yield | 1.01% | 1.68% | |
| Holdings | 505 | 29 | |
| YTD Return | +14.24% | +14.86% | |
| 1Y Return | +21.71% | +18.84% | |
| 3Y Return (annualized) | +22.10% | +10.94% | |
| 5Y Return (annualized) | +13.21% | +6.17% | |
| Volatility (annualized) | 15.3% | 20.7% | |
| Max Drawdown | -56.5% | -60.7% | |
| Fund Family | State Street Investment Management | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Jan 22, 1993 | Dec 16, 1998 |
SPY vs XLB Performance
State Street SPDR S&P 500 ETF Trust (SPY) is a ETF from State Street Investment Management and State Street Materials Select Sector SPDR ETF (XLB) is a ETF from SPDR State Street Global Advisors. Over the past year SPY returned +21.71% while XLB returned +18.84%. Year to date, SPY is up 14.24% versus a gain of 14.86% for XLB.
Over three years, SPY compounded at +22.10% per year against +10.94% for XLB; over five years the annualized figures are +13.21% and +6.17% respectively. Across the full 28-year window we track, SPY has the edge at +8.86% annualized vs +6.44%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
XLB has been the more volatile fund, with annualized monthly volatility of 20.7% compared with 15.3% for SPY. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -56.5% for SPY and -60.7% for XLB. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.80. They usually move together, but the gap leaves some room for diversification.
Fees and Cost Over Time
SPY charges 0.09% per year while XLB charges 0.08%. On a $10,000 position that is $9 vs $8 annually, a gap of $1 per year that compounds over a long holding period. On income, SPY currently yields 1.01% against 1.68% for XLB.
Holdings Overlap
SPY and XLB share 25 holdings out of 506 unique holdings combined, representing a 1.7% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, SPY or XLB?
SPY has an expense ratio of 0.09% while XLB charges 0.08%. XLB is the cheaper option. On a $10,000 investment, that is $1 per year of difference.
Which performed better, SPY or XLB?
Over the past year SPY returned +21.71% vs +18.84% for XLB, so SPY leads on 1-year performance. Over the longest common window we track (28 years), SPY annualized +8.86% vs +6.44% for XLB. Past performance does not guarantee future results.
Which is riskier, SPY or XLB?
XLB has been the more volatile fund at 20.7% annualized versus 15.3% for SPY. Worst drawdown: SPY -56.5% vs XLB -60.7%.
Should I hold both SPY and XLB?
SPY and XLB have a monthly-return correlation of 0.80, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between SPY and XLB?
SPY and XLB share 25 common holdings with a 1.7% weight overlap. Combined, they hold 506 unique securities.
Which pays a higher dividend, SPY or XLB?
SPY yields 1.01% while XLB yields 1.68%, so XLB currently pays the higher dividend yield.
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