VNQ vs XLK
Vanguard Real Estate ETF vs State Street Technology Select Sector SPDR ETF
Quick Verdict
XLK has a lower expense ratio. XLK delivered stronger 1-year returns. VNQ offers more diversification with 144 holdings.
Side-by-Side Comparison
| Metric | VNQ | XLK | Winner |
|---|---|---|---|
| Expense Ratio | 0.13% | 0.08% | |
| AUM | $39.3B | $124.4B | |
| Dividend Yield | 3.49% | 0.45% | |
| Holdings | 144 | 77 | |
| YTD Return | +13.46% | +27.34% | |
| 1Y Return | +13.14% | +42.34% | |
| 3Y Return (annualized) | +11.55% | +30.61% | |
| 5Y Return (annualized) | +2.33% | +19.29% | |
| Volatility (annualized) | 21.4% | 23.2% | |
| Max Drawdown | -75.8% | -82.0% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Sep 23, 2004 | Dec 16, 1998 |
VNQ vs XLK Performance
Vanguard Real Estate ETF (VNQ) is a ETF from Vanguard (US) and State Street Technology Select Sector SPDR ETF (XLK) is a ETF from SPDR State Street Global Advisors. Over the past year VNQ returned +13.14% while XLK returned +42.34%. Year to date, VNQ is up 13.46% versus a gain of 27.34% for XLK.
Over three years, VNQ compounded at +11.55% per year against +30.61% for XLK; over five years the annualized figures are +2.33% and +19.29% respectively. Across the full 22-year window we track, XLK has the edge at +9.37% annualized vs +4.13%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
XLK has been the more volatile fund, with annualized monthly volatility of 23.2% 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 -82.0% for XLK. 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 0.57. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VNQ charges 0.13% per year while XLK 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 0.45% for XLK.
Holdings Overlap
VNQ and XLK share 0 holdings out of 219 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 XLK?
VNQ has an expense ratio of 0.13% while XLK charges 0.08%. XLK is the cheaper option. On a $10,000 investment, that is $5 per year of difference.
Which performed better, VNQ or XLK?
Over the past year VNQ returned +13.14% vs +42.34% for XLK, so XLK leads on 1-year performance. Over the longest common window we track (22 years), VNQ annualized +4.13% vs +9.37% for XLK. Past performance does not guarantee future results.
Which is riskier, VNQ or XLK?
XLK has been the more volatile fund at 23.2% annualized versus 21.4% for VNQ. Worst drawdown: VNQ -75.8% vs XLK -82.0%.
Should I hold both VNQ and XLK?
VNQ and XLK have a monthly-return correlation of 0.57, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VNQ and XLK?
VNQ and XLK share 0 common holdings with a 0.0% weight overlap. Combined, they hold 219 unique securities.
Which pays a higher dividend, VNQ or XLK?
VNQ yields 3.49% while XLK yields 0.45%, so VNQ currently pays the higher dividend yield.
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