VNQ vs XLE
Vanguard Real Estate ETF vs State Street Energy Select Sector SPDR ETF
Quick Verdict
XLE has a lower expense ratio. XLE delivered stronger 1-year returns. VNQ offers more diversification with 144 holdings.
Side-by-Side Comparison
| Metric | VNQ | XLE | Winner |
|---|---|---|---|
| Expense Ratio | 0.13% | 0.08% | |
| AUM | $39.3B | $40.0B | |
| Dividend Yield | 3.49% | 2.55% | |
| Holdings | 144 | 24 | |
| YTD Return | +13.46% | +41.33% | |
| 1Y Return | +13.14% | +51.94% | |
| 3Y Return (annualized) | +11.55% | +16.98% | |
| 5Y Return (annualized) | +2.33% | +26.28% | |
| Volatility (annualized) | 21.4% | 25.1% | |
| Max Drawdown | -75.8% | -76.7% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Sep 23, 2004 | Dec 16, 1998 |
VNQ vs XLE Performance
Vanguard Real Estate ETF (VNQ) is a ETF from Vanguard (US) and State Street Energy Select Sector SPDR ETF (XLE) is a ETF from SPDR State Street Global Advisors. Over the past year VNQ returned +13.14% while XLE returned +51.94%. Year to date, VNQ is up 13.46% versus a gain of 41.33% for XLE.
Over three years, VNQ compounded at +11.55% per year against +16.98% for XLE; over five years the annualized figures are +2.33% and +26.28% respectively. Across the full 22-year window we track, XLE has the edge at +7.12% annualized vs +4.13%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
XLE has been the more volatile fund, with annualized monthly volatility of 25.1% compared with 21.4% for VNQ. 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 -75.8% for VNQ and -76.7% for XLE. 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 0.41. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VNQ charges 0.13% per year while XLE charges 0.08%. On a $10,000 position that is $13 vs $8 annually, a gap of $5 per year that compounds over a long holding period. On income, VNQ currently yields 3.49% against 2.55% for XLE.
Holdings Overlap
VNQ and XLE share 0 holdings out of 166 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, VNQ or XLE?
VNQ has an expense ratio of 0.13% while XLE charges 0.08%. XLE is the cheaper option. On a $10,000 investment, that is $5 per year of difference.
Which performed better, VNQ or XLE?
Over the past year VNQ returned +13.14% vs +51.94% for XLE, so XLE leads on 1-year performance. Over the longest common window we track (22 years), VNQ annualized +4.13% vs +7.12% for XLE. Past performance does not guarantee future results.
Which is riskier, VNQ or XLE?
XLE has been the more volatile fund at 25.1% annualized versus 21.4% for VNQ. Worst drawdown: VNQ -75.8% vs XLE -76.7%.
Should I hold both VNQ and XLE?
VNQ and XLE have a monthly-return correlation of 0.41, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VNQ and XLE?
VNQ and XLE share 0 common holdings with a 0.0% weight overlap. Combined, they hold 166 unique securities.
Which pays a higher dividend, VNQ or XLE?
VNQ yields 3.49% while XLE yields 2.55%, so VNQ currently pays the higher dividend yield.
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