VUG vs XLF
Vanguard Morningstar Growth ETF vs State Street Financial Select Sector SPDR ETF
Quick Verdict
VUG has a lower expense ratio. VUG delivered stronger 1-year returns. VUG offers more diversification with 146 holdings.
Side-by-Side Comparison
| Metric | VUG | XLF | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.08% | |
| AUM | $219.5B | $54.9B | |
| Dividend Yield | 0.40% | 1.42% | |
| Holdings | 146 | 80 | |
| YTD Return | +8.34% | +5.88% | |
| 1Y Return | +16.02% | +9.27% | |
| 3Y Return (annualized) | +22.65% | +20.81% | |
| 5Y Return (annualized) | +11.92% | +10.42% | |
| Volatility (annualized) | 16.5% | 21.3% | |
| Max Drawdown | -51.4% | -83.8% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Jan 26, 2004 | Dec 16, 1998 |
VUG vs XLF Performance
Vanguard Morningstar Growth ETF (VUG) 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 VUG returned +16.02% while XLF returned +9.27%. Year to date, VUG is up 8.34% versus a gain of 5.88% for XLF.
Over three years, VUG compounded at +22.65% per year against +20.81% for XLF; over five years the annualized figures are +11.92% and +10.42% respectively. Across the full 23-year window we track, VUG has the edge at +11.17% annualized vs +3.68%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
XLF has been the more volatile fund, with annualized monthly volatility of 21.3% compared with 16.5% for VUG. 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 -51.4% for VUG 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 0.69. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VUG 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, VUG currently yields 0.40% against 1.42% for XLF.
Holdings Overlap
VUG and XLF share 11 holdings out of 212 unique holdings combined, representing a 3.8% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VUG or XLF?
VUG has an expense ratio of 0.03% while XLF charges 0.08%. VUG is the cheaper option. On a $10,000 investment, that is $5 per year of difference.
Which performed better, VUG or XLF?
Over the past year VUG returned +16.02% vs +9.27% for XLF, so VUG leads on 1-year performance. Over the longest common window we track (23 years), VUG annualized +11.17% vs +3.68% for XLF. Past performance does not guarantee future results.
Which is riskier, VUG or XLF?
XLF has been the more volatile fund at 21.3% annualized versus 16.5% for VUG. Worst drawdown: VUG -51.4% vs XLF -83.8%.
Should I hold both VUG and XLF?
VUG and XLF have a monthly-return correlation of 0.69, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VUG and XLF?
VUG and XLF share 11 common holdings with a 3.8% weight overlap. Combined, they hold 212 unique securities.
Which pays a higher dividend, VUG or XLF?
VUG yields 0.40% while XLF yields 1.42%, so XLF currently pays the higher dividend yield.
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