VGSH vs XLF
Vanguard Short Term Treasury ETF vs State Street Financial Select Sector SPDR ETF
Quick Verdict
VGSH has a lower expense ratio. XLF delivered stronger 1-year returns. VGSH offers more diversification with 94 holdings.
Side-by-Side Comparison
| Metric | VGSH | XLF | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.08% | |
| AUM | $30.2B | $54.9B | |
| Dividend Yield | 3.85% | 1.42% | |
| Holdings | 94 | 80 | |
| YTD Return | +0.96% | +5.88% | |
| 1Y Return | +2.45% | +9.27% | |
| 3Y Return (annualized) | +4.26% | +20.81% | |
| 5Y Return (annualized) | +1.92% | +10.42% | |
| Volatility (annualized) | 1.4% | 21.3% | |
| Max Drawdown | -6.7% | -83.8% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Fixed Income | Equity | |
| Inception | Nov 19, 2009 | Dec 16, 1998 |
VGSH vs XLF Performance
Vanguard Short Term Treasury ETF (VGSH) is a ETF 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 VGSH returned +2.45% while XLF returned +9.27%. Year to date, VGSH is up 0.96% versus a gain of 5.88% for XLF.
Over three years, VGSH compounded at +4.26% per year against +20.81% for XLF; over five years the annualized figures are +1.92% and +10.42% respectively. Across the full 17-year window we track, XLF has the edge at +3.68% annualized vs +0.72%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
XLF has been the more volatile fund, with annualized monthly volatility of 21.3% compared with 1.4% for VGSH. 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 -6.7% for VGSH 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 -0.12. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VGSH charges 0.03% per year while XLF charges 0.08%. On a $10,000 position that is $3 vs $8 annually, a gap of $5 per year that compounds over a long holding period. On income, VGSH currently yields 3.85% against 1.42% for XLF.
Holdings Overlap
VGSH and XLF share 0 holdings out of 93 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VGSH or XLF?
VGSH has an expense ratio of 0.03% while XLF charges 0.08%. VGSH is the cheaper option. On a $10,000 investment, that is $5 per year of difference.
Which performed better, VGSH or XLF?
Over the past year VGSH returned +2.45% vs +9.27% for XLF, so XLF leads on 1-year performance. Over the longest common window we track (17 years), VGSH annualized +0.72% vs +3.68% for XLF. Past performance does not guarantee future results.
Which is riskier, VGSH or XLF?
XLF has been the more volatile fund at 21.3% annualized versus 1.4% for VGSH. Worst drawdown: VGSH -6.7% vs XLF -83.8%.
Should I hold both VGSH and XLF?
VGSH and XLF have a monthly-return correlation of -0.12, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VGSH and XLF?
VGSH and XLF share 0 common holdings with a 0.0% weight overlap. Combined, they hold 93 unique securities.
Which pays a higher dividend, VGSH or XLF?
VGSH yields 3.85% while XLF yields 1.42%, so VGSH currently pays the higher dividend yield.
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