VTEB vs XLK
Vanguard Tax-Exempt Bond ETF vs State Street Technology Select Sector SPDR ETF
Quick Verdict
VTEB has a lower expense ratio. XLK delivered stronger 1-year returns. VTEB offers more diversification with 10,566 holdings.
Side-by-Side Comparison
| Metric | VTEB | XLK | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.08% | |
| AUM | $48.5B | $124.4B | |
| Dividend Yield | 3.41% | 0.45% | |
| Holdings | 10,566 | 77 | |
| YTD Return | +0.38% | +27.20% | |
| 1Y Return | +4.95% | +41.67% | |
| 3Y Return (annualized) | +3.39% | +30.51% | |
| 5Y Return (annualized) | +0.59% | +19.55% | |
| Volatility (annualized) | 4.9% | 23.2% | |
| Max Drawdown | -17.0% | -82.0% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Tax Preferred | Equity | |
| Inception | Aug 21, 2015 | Dec 16, 1998 |
VTEB vs XLK Performance
Vanguard Tax-Exempt Bond ETF (VTEB) 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 VTEB returned +4.95% while XLK returned +41.67%. Year to date, VTEB is up 0.38% versus a gain of 27.20% for XLK.
Over three years, VTEB compounded at +3.39% per year against +30.51% for XLK; over five years the annualized figures are +0.59% and +19.55% respectively. Across the full 11-year window we track, XLK has the edge at +9.37% annualized vs +1.24%. 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 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 -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 0.43. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VTEB charges 0.03% per year while XLK 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 3.41% against 0.45% for XLK.
Holdings Overlap
VTEB and XLK share 0 holdings out of 1069 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 XLK?
VTEB has an expense ratio of 0.03% while XLK 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 XLK?
Over the past year VTEB returned +4.95% vs +41.67% for XLK, so XLK leads on 1-year performance. Over the longest common window we track (11 years), VTEB annualized +1.24% vs +9.37% for XLK. Past performance does not guarantee future results.
Which is riskier, VTEB or XLK?
XLK has been the more volatile fund at 23.2% annualized versus 4.9% for VTEB. Worst drawdown: VTEB -17.0% vs XLK -82.0%.
Should I hold both VTEB and XLK?
VTEB and XLK have a monthly-return correlation of 0.43, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VTEB and XLK?
VTEB and XLK share 0 common holdings with a 0.0% weight overlap. Combined, they hold 1069 unique securities.
Which pays a higher dividend, VTEB or XLK?
VTEB yields 3.41% while XLK yields 0.45%, so VTEB currently pays the higher dividend yield.
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