VWO vs XLF
Vanguard FTSE Emerging Markets ETF vs State Street Financial Select Sector SPDR ETF
Quick Verdict
VWO has a lower expense ratio. VWO delivered stronger 1-year returns. VWO offers more diversification with 6,334 holdings.
Side-by-Side Comparison
| Metric | VWO | XLF | Winner |
|---|---|---|---|
| Expense Ratio | 0.06% | 0.08% | |
| AUM | $122.0B | $58.6B | |
| Dividend Yield | 2.39% | 1.42% | |
| Holdings | 6,334 | 80 | |
| YTD Return | +10.18% | +5.55% | |
| 1Y Return | +20.99% | +10.76% | |
| 3Y Return (annualized) | +18.45% | +21.50% | |
| 5Y Return (annualized) | +7.14% | +10.54% | |
| Volatility (annualized) | 20.1% | 21.4% | |
| Max Drawdown | -68.3% | -83.8% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Mar 4, 2005 | Dec 16, 1998 |
VWO vs XLF Performance
Vanguard FTSE Emerging Markets ETF (VWO) 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 VWO returned +20.99% while XLF returned +10.76%. Year to date, VWO is up 10.18% versus a gain of 5.55% for XLF.
Over three years, VWO compounded at +18.45% per year against +21.50% for XLF; over five years the annualized figures are +7.14% and +10.54% respectively. Across the full 21-year window we track, VWO has the edge at +4.98% annualized vs +3.67%. 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 20.1% for VWO. 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 -68.3% for VWO 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 0.61. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VWO charges 0.06% per year while XLF charges 0.08%. On a $10,000 position that is $6 vs $8 annually, a gap of $2 per year that compounds over a long holding period. On income, VWO currently yields 2.39% against 1.42% for XLF.
Holdings Overlap
VWO and XLF share 0 holdings out of 4061 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, VWO or XLF?
VWO has an expense ratio of 0.06% while XLF charges 0.08%. VWO is the cheaper option. On a $10,000 investment, that is $2 per year of difference.
Which performed better, VWO or XLF?
Over the past year VWO returned +20.99% vs +10.76% for XLF, so VWO leads on 1-year performance. Over the longest common window we track (21 years), VWO annualized +4.98% vs +3.67% for XLF. Past performance does not guarantee future results.
Which is riskier, VWO or XLF?
XLF has been the more volatile fund at 21.4% annualized versus 20.1% for VWO. Worst drawdown: VWO -68.3% vs XLF -83.8%.
Should I hold both VWO and XLF?
VWO and XLF have a monthly-return correlation of 0.61, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VWO and XLF?
VWO and XLF share 0 common holdings with a 0.0% weight overlap. Combined, they hold 4061 unique securities.
Which pays a higher dividend, VWO or XLF?
VWO yields 2.39% while XLF yields 1.42%, so VWO currently pays the higher dividend yield.
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