VNQ vs XLV
Vanguard Real Estate ETF vs State Street Health Care Select Sector SPDR ETF
Quick Verdict
XLV has a lower expense ratio. XLV delivered stronger 1-year returns. VNQ offers more diversification with 144 holdings.
Side-by-Side Comparison
| Metric | VNQ | XLV | Winner |
|---|---|---|---|
| Expense Ratio | 0.13% | 0.08% | |
| AUM | $39.3B | $43.9B | |
| Dividend Yield | 3.49% | 1.56% | |
| Holdings | 144 | 63 | |
| YTD Return | +13.84% | +8.55% | |
| 1Y Return | +15.14% | +27.12% | |
| 3Y Return (annualized) | +10.79% | +9.09% | |
| 5Y Return (annualized) | +2.35% | +6.07% | |
| Volatility (annualized) | 21.4% | 14.2% | |
| Max Drawdown | -75.8% | -40.6% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Sep 23, 2004 | Dec 16, 1998 |
VNQ vs XLV Performance
Vanguard Real Estate ETF (VNQ) is a ETF from Vanguard (US) and State Street Health Care Select Sector SPDR ETF (XLV) is a ETF from SPDR State Street Global Advisors. Over the past year VNQ returned +15.14% while XLV returned +27.12%. Year to date, VNQ is up 13.84% versus a gain of 8.55% for XLV.
Over three years, VNQ compounded at +10.79% per year against +9.09% for XLV; over five years the annualized figures are +2.35% and +6.07% respectively. Across the full 22-year window we track, XLV has the edge at +7.46% annualized vs +4.15%. 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 14.2% for XLV. 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 -40.6% for XLV. 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 0.59. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VNQ charges 0.13% per year while XLV 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 1.56% for XLV.
Holdings Overlap
VNQ and XLV share 0 holdings out of 204 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 XLV?
VNQ has an expense ratio of 0.13% while XLV charges 0.08%. XLV is the cheaper option. On a $10,000 investment, that is $5 per year of difference.
Which performed better, VNQ or XLV?
Over the past year VNQ returned +15.14% vs +27.12% for XLV, so XLV leads on 1-year performance. Over the longest common window we track (22 years), VNQ annualized +4.15% vs +7.46% for XLV. Past performance does not guarantee future results.
Which is riskier, VNQ or XLV?
VNQ has been the more volatile fund at 21.4% annualized versus 14.2% for XLV. Worst drawdown: VNQ -75.8% vs XLV -40.6%.
Should I hold both VNQ and XLV?
VNQ and XLV have a monthly-return correlation of 0.59, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VNQ and XLV?
VNQ and XLV share 0 common holdings with a 0.0% weight overlap. Combined, they hold 204 unique securities.
Which pays a higher dividend, VNQ or XLV?
VNQ yields 3.49% while XLV yields 1.56%, so VNQ currently pays the higher dividend yield.
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