VNQ vs XLF
Vanguard Real Estate ETF vs State Street Financial Select Sector SPDR ETF
Quick Verdict
XLF has a lower expense ratio. VNQ delivered stronger 1-year returns. VNQ offers more diversification with 144 holdings.
Side-by-Side Comparison
| Metric | VNQ | XLF | Winner |
|---|---|---|---|
| Expense Ratio | 0.13% | 0.08% | |
| AUM | $39.3B | $58.6B | |
| Dividend Yield | 3.49% | 1.42% | |
| Holdings | 144 | 80 | |
| YTD Return | +13.46% | +5.55% | |
| 1Y Return | +13.14% | +10.76% | |
| 3Y Return (annualized) | +11.55% | +21.50% | |
| 5Y Return (annualized) | +2.33% | +10.54% | |
| Volatility (annualized) | 21.4% | 21.4% | |
| Max Drawdown | -75.8% | -83.8% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Sep 23, 2004 | Dec 16, 1998 |
VNQ vs XLF Performance
Vanguard Real Estate ETF (VNQ) 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 VNQ returned +13.14% while XLF returned +10.76%. Year to date, VNQ is up 13.46% versus a gain of 5.55% for XLF.
Over three years, VNQ compounded at +11.55% per year against +21.50% for XLF; over five years the annualized figures are +2.33% and +10.54% respectively. Across the full 22-year window we track, VNQ has the edge at +4.13% annualized vs +3.67%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VNQ has been the more volatile fund, with annualized monthly volatility of 21.4% compared with 21.4% for XLF. 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 -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 0.70. They usually move together, but the gap leaves some room for diversification.
Fees and Cost Over Time
VNQ charges 0.13% per year while XLF 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 1.42% for XLF.
Holdings Overlap
VNQ and XLF share 0 holdings out of 221 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 XLF?
VNQ has an expense ratio of 0.13% while XLF charges 0.08%. XLF is the cheaper option. On a $10,000 investment, that is $5 per year of difference.
Which performed better, VNQ or XLF?
Over the past year VNQ returned +13.14% vs +10.76% for XLF, so VNQ leads on 1-year performance. Over the longest common window we track (22 years), VNQ annualized +4.13% vs +3.67% for XLF. Past performance does not guarantee future results.
Which is riskier, VNQ or XLF?
VNQ has been the more volatile fund at 21.4% annualized versus 21.4% for XLF. Worst drawdown: VNQ -75.8% vs XLF -83.8%.
Should I hold both VNQ and XLF?
VNQ and XLF have a monthly-return correlation of 0.70, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VNQ and XLF?
VNQ and XLF share 0 common holdings with a 0.0% weight overlap. Combined, they hold 221 unique securities.
Which pays a higher dividend, VNQ or XLF?
VNQ yields 3.49% while XLF yields 1.42%, so VNQ currently pays the higher dividend yield.
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