VDIGX vs XLF
Vanguard Dividend Growth Fund Investor Class vs State Street Financial Select Sector SPDR ETF
Quick Verdict
XLF has a lower expense ratio. XLF delivered stronger 1-year returns. XLF offers more diversification with 80 holdings.
Side-by-Side Comparison
| Metric | VDIGX | XLF | Winner |
|---|---|---|---|
| Expense Ratio | 0.20% | 0.08% | |
| AUM | $35.5B | $54.9B | |
| Dividend Yield | 23.36% | 1.42% | |
| Holdings | 62 | 80 | |
| YTD Return | -1.31% | +5.97% | |
| 1Y Return | -12.26% | +9.36% | |
| 3Y Return (annualized) | -3.33% | +20.39% | |
| 5Y Return (annualized) | -3.31% | +10.39% | |
| Volatility (annualized) | 16.1% | 21.4% | |
| Max Drawdown | -32.6% | -83.8% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | May 15, 1992 | Dec 16, 1998 |
VDIGX vs XLF Performance
Vanguard Dividend Growth Fund Investor Class (VDIGX) is a mutual fund from Vanguard (US) and State Street Financial Select Sector SPDR ETF (XLF) is a ETF from SPDR State Street Global Advisors. Over the past year VDIGX returned -12.26% while XLF returned +9.36%. Year to date, VDIGX is down 1.31% versus a gain of 5.97% for XLF.
Over three years, VDIGX compounded at -3.33% per year against +20.39% for XLF; over five years the annualized figures are -3.31% and +10.39% respectively. Across the full 5-year window we track, XLF has the edge at +3.68% annualized vs -3.31%. 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 16.1% for VDIGX. 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 -32.6% for VDIGX 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 0.65. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VDIGX charges 0.20% per year while XLF charges 0.08%. On a $10,000 position that is $20 vs $8 annually, a gap of $12 per year that compounds over a long holding period. On income, VDIGX currently yields 23.36% against 1.42% for XLF.
Holdings Overlap
VDIGX and XLF share 8 holdings out of 120 unique holdings combined, representing a 17.5% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VDIGX or XLF?
VDIGX has an expense ratio of 0.20% while XLF charges 0.08%. XLF is the cheaper option. On a $10,000 investment, that is $12 per year of difference.
Which performed better, VDIGX or XLF?
Over the past year VDIGX returned -12.26% vs +9.36% for XLF, so XLF leads on 1-year performance. Over the longest common window we track (5 years), VDIGX annualized -3.31% vs +3.68% for XLF. Past performance does not guarantee future results.
Which is riskier, VDIGX or XLF?
XLF has been the more volatile fund at 21.4% annualized versus 16.1% for VDIGX. Worst drawdown: VDIGX -32.6% vs XLF -83.8%.
Should I hold both VDIGX and XLF?
VDIGX and XLF have a monthly-return correlation of 0.65, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VDIGX and XLF?
VDIGX and XLF share 8 common holdings with a 17.5% weight overlap. Combined, they hold 120 unique securities.
Which pays a higher dividend, VDIGX or XLF?
VDIGX yields 23.36% while XLF yields 1.42%, so VDIGX currently pays the higher dividend yield.
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