SPY vs XLF
State Street SPDR S&P 500 ETF Trust vs State Street Financial Select Sector SPDR ETF
Quick Verdict
XLF has a lower expense ratio. SPY delivered stronger 1-year returns. SPY offers more diversification with 503 holdings.
Side-by-Side Comparison
| Metric | SPY | XLF | Winner |
|---|---|---|---|
| Expense Ratio | 0.09% | 0.08% | |
| AUM | $789.1B | $56.2B | |
| Dividend Yield | 1.01% | 1.51% | |
| Holdings | 505 | 80 | |
| YTD Return | +13.68% | +6.36% | |
| 1Y Return | +21.53% | +12.12% | |
| 3Y Return (annualized) | +21.44% | +20.37% | |
| 5Y Return (annualized) | +13.18% | +10.20% | |
| Volatility (annualized) | 15.3% | 21.4% | |
| Max Drawdown | -56.5% | -83.8% | |
| Fund Family | State Street Investment Management | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Jan 22, 1993 | Dec 16, 1998 |
SPY vs XLF Performance
State Street SPDR S&P 500 ETF Trust (SPY) is a ETF from State Street Investment Management and State Street Financial Select Sector SPDR ETF (XLF) is a ETF from SPDR State Street Global Advisors. Over the past year SPY returned +21.53% while XLF returned +12.12%. Year to date, SPY is up 13.68% versus a gain of 6.36% for XLF.
Over three years, SPY compounded at +21.44% per year against +20.37% for XLF; over five years the annualized figures are +13.18% and +10.20% respectively. Across the full 28-year window we track, SPY has the edge at +8.85% annualized vs +3.70%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
XLF has been the more volatile fund, with annualized monthly volatility of 21.4% 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 -83.8% for XLF. 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 XLF 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 1.51% for XLF.
Holdings Overlap
SPY and XLF share 76 holdings out of 504 unique holdings combined, representing a 12.3% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, SPY or XLF?
SPY has an expense ratio of 0.09% while XLF charges 0.08%. XLF is the cheaper option. On a $10,000 investment, that is $1 per year of difference.
Which performed better, SPY or XLF?
Over the past year SPY returned +21.53% vs +12.12% for XLF, so SPY leads on 1-year performance. Over the longest common window we track (28 years), SPY annualized +8.85% vs +3.70% for XLF. Past performance does not guarantee future results.
Which is riskier, SPY or XLF?
XLF has been the more volatile fund at 21.4% annualized versus 15.3% for SPY. Worst drawdown: SPY -56.5% vs XLF -83.8%.
Should I hold both SPY and XLF?
SPY and XLF 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 XLF?
SPY and XLF share 76 common holdings with a 12.3% weight overlap. Combined, they hold 504 unique securities.
Which pays a higher dividend, SPY or XLF?
SPY yields 1.01% while XLF yields 1.51%, so XLF currently pays the higher dividend yield.
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