VTEB vs XLF
Vanguard Tax-Exempt Bond ETF vs State Street Financial Select Sector SPDR ETF
Quick Verdict
VTEB has a lower expense ratio. XLF delivered stronger 1-year returns. VTEB offers more diversification with 3533 holdings.
Side-by-Side Comparison
| Metric | VTEB | XLF | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.08% | |
| AUM | $46.0B | $56.2B | |
| Dividend Yield | 3.34% | 1.51% | |
| Holdings | 9,952 | 80 | |
| YTD Return | +0.51% | +6.16% | |
| 1Y Return | +4.96% | +13.27% | |
| 3Y Return (annualized) | +3.17% | +20.20% | |
| 5Y Return (annualized) | +0.57% | +10.45% | |
| Volatility (annualized) | 4.9% | 21.4% | |
| Max Drawdown | -17.0% | -83.8% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Tax Preferred | Equity | |
| Inception | Aug 21, 2015 | Dec 16, 1998 |
VTEB vs XLF Performance
Vanguard Tax-Exempt Bond ETF (VTEB) 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 VTEB returned +4.96% while XLF returned +13.27%. Year to date, VTEB is up 0.51% versus a gain of 6.16% for XLF.
Over three years, VTEB compounded at +3.17% per year against +20.20% for XLF; over five years the annualized figures are +0.57% and +10.45% respectively. Across the full 11-year window we track, XLF has the edge at +3.70% annualized vs +1.26%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
XLF has been the more volatile fund, with annualized monthly volatility of 21.4% compared with 4.9% for VTEB. 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 -17.0% for VTEB 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 0.23. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VTEB 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, VTEB currently yields 3.34% against 1.51% for XLF.
Holdings Overlap
VTEB and XLF share 0 holdings out of 3610 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, VTEB or XLF?
VTEB has an expense ratio of 0.03% while XLF charges 0.08%. VTEB is the cheaper option. On a $10,000 investment, that is $5 per year of difference.
Which performed better, VTEB or XLF?
Over the past year VTEB returned +4.96% vs +13.27% for XLF, so XLF leads on 1-year performance. Over the longest common window we track (11 years), VTEB annualized +1.26% vs +3.70% for XLF. Past performance does not guarantee future results.
Which is riskier, VTEB or XLF?
XLF has been the more volatile fund at 21.4% annualized versus 4.9% for VTEB. Worst drawdown: VTEB -17.0% vs XLF -83.8%.
Should I hold both VTEB and XLF?
VTEB and XLF have a monthly-return correlation of 0.23, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VTEB and XLF?
VTEB and XLF share 0 common holdings with a 0.0% weight overlap. Combined, they hold 3610 unique securities.
Which pays a higher dividend, VTEB or XLF?
VTEB yields 3.34% while XLF yields 1.51%, so VTEB currently pays the higher dividend yield.
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