VFH vs. XLY

Last updated Jun 13, 2026

VFH (Vanguard Financials ETF) and XLY (Consumer Discretionary Select Sector SPDR Fund) are both exchange-traded funds - VFH is a Financials Equities fund tracking the MSCI US Investable Market Financials 25/50 Index, while XLY is a Consumer Discretionary Equities fund tracking the Consumer Discretionary Select Sector Index. Both are passively managed. Over the past 10 years, VFH returned 13.15%/yr vs 12.78%/yr for XLY. A 0.71 correlation means they provide meaningful diversification when combined. VFH charges 0.09%/yr vs 0.13%/yr for XLY.

Performance

VFH vs. XLY - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Vanguard Financials ETF (VFH) and Consumer Discretionary Select Sector SPDR Fund (XLY). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, VFH achieves a -1.58% return, which is significantly higher than XLY's -2.16% return. Both investments have delivered pretty close results over the past 10 years, with VFH having a 13.15% annualized return and XLY not far behind at 12.78%.

VFH

• 1D: 1.34%
• 1M: 4.13%
• YTD: -1.58%
• 6M: -1.74%
• 1Y: 9.92%
• 3Y*: 19.69%
• 5Y*: 9.36%
• 10Y*: 13.15%

XLY

• 1D: 0.26%
• 1M: -1.74%
• YTD: -2.16%
• 6M: -3.01%
• 1Y: 11.01%
• 3Y*: 12.99%
• 5Y*: 7.00%
• 10Y*: 12.78%

*Multi-year figures are annualized to reflect compound growth (CAGR)

VFH vs. XLY - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
VFH Vanguard Financials ETF	-1.58%	14.91%	30.44%	14.17%	-12.31%	35.22%	-1.96%	31.57%	-13.52%	19.99%
XLY Consumer Discretionary Select Sector SPDR Fund	-2.16%	7.37%	26.51%	39.64%	-36.27%	27.93%	29.63%	28.39%	1.58%	22.82%

Correlation

The correlation between VFH and XLY is 0.55, which is moderate. They share some common price drivers but move independently often enough to provide real diversification benefit when combined.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.55
Correlation (3Y) Calculated over the trailing 3-year period	0.59
Correlation (5Y) Calculated over the trailing 5-year period	0.65
Correlation (10Y) Calculated over the trailing 10-year period	0.63
Correlation (All Time) Calculated using the full available price history since Jan 30, 2004	0.71

The correlation between VFH and XLY shifts across timeframes, from 0.55 (1 year) to 0.71 (all time), reflecting how their relationship changes across market environments.

VFH vs. XLY - Sectors Allocation Comparison

Sectors	VFH	XLY
Financial Services	96.8%	-
Technology	2.1%	0.9%
Real Estate	0.8%	-
Industrials	0.2%	0.1%
Healthcare	0.1%	-
Communication Services	0.0%	1.3%
Consumer Cyclical	0.0%	97.6%
Basic Materials	-	-
Consumer Defensive	-	-
Energy	-	-
Utilities	-	-

Return for Risk

VFH vs. XLY — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

VFH

VFH Risk / Return Rank: 17
VFH Sharpe Ratio Rank: 18
VFH Sortino Ratio Rank: 17
VFH Omega Ratio Rank: 17
VFH Calmar Ratio Rank: 16
VFH Martin Ratio Rank: 16

XLY

XLY Risk / Return Rank: 19
XLY Sharpe Ratio Rank: 19
XLY Sortino Ratio Rank: 19
XLY Omega Ratio Rank: 18
XLY Calmar Ratio Rank: 19
XLY Martin Ratio Rank: 20

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

VFH vs. XLY - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Vanguard Financials ETF (VFH) and Consumer Discretionary Select Sector SPDR Fund (XLY). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.

	VFH	XLY	Difference
Sharpe ratio: Return per unit of total volatility	0.51	0.55	-0.04
Sortino ratio: Return per unit of downside risk	0.78	0.89	-0.11
Omega ratio: Gain probability vs. loss probability	1.10	1.10	-0.01
Calmar ratio: Return relative to maximum drawdown	0.52	0.67	-0.15
Martin ratio: Return relative to average drawdown	1.35	2.05	-0.70

VFH vs. XLY - Sharpe Ratio Comparison

The current VFH Sharpe Ratio is 0.51, which is comparable to the XLY Sharpe Ratio of 0.55. The chart below compares the historical Sharpe Ratios of VFH and XLY, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Drawdowns

VFH vs. XLY - Drawdown Comparison

The maximum VFH drawdown since its inception was -78.61%, which is greater than XLY's maximum drawdown of -59.05%. Use the drawdown chart below to compare losses from any high point for VFH and XLY.

Drawdown Indicators

	VFH	XLY	Difference
Max Drawdown Largest peak-to-trough decline	-78.61%	-59.05%	-19.56%
Max Drawdown (1Y) Largest decline over 1 year	-14.75%	-14.98%	+0.23%
Max Drawdown (3Y) Largest decline over 3 years	-17.30%	-26.01%	+8.71%
Max Drawdown (5Y) Largest decline over 5 years	-25.66%	-39.67%	+14.01%
Max Drawdown (10Y) Largest decline over 10 years	-44.42%	-39.67%	-4.75%
Current Drawdown Current decline from peak	-4.57%	-6.17%	+1.60%
Average Drawdown Average peak-to-trough decline	-18.52%	-9.55%	-8.97%
Ulcer Index Depth and duration of drawdowns from previous peaks	5.65%	4.88%	+0.77%

Volatility

VFH vs. XLY - Volatility Comparison

The current volatility for Vanguard Financials ETF (VFH) is 4.33%, while Consumer Discretionary Select Sector SPDR Fund (XLY) has a volatility of 6.19%. This indicates that VFH experiences smaller price fluctuations and is considered to be less risky than XLY based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	VFH	XLY	Difference
Volatility (1M) Calculated over the trailing 1-month period	4.33%	6.19%	-1.86%
Volatility (6M) Calculated over the trailing 6-month period	11.41%	13.44%	-2.03%
Volatility (1Y) Calculated over the trailing 1-year period	15.06%	18.27%	-3.21%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	19.34%	23.83%	-4.49%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	22.55%	22.08%	+0.47%

VFH vs. XLY - Expense Ratio Comparison

VFH has a 0.09% expense ratio, which is lower than XLY's 0.13% expense ratio. Despite the difference, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.

Dividends

VFH vs. XLY - Dividend Comparison

VFH's dividend yield for the trailing twelve months is around 1.48%, more than XLY's 0.77% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
VFH Vanguard Financials ETF	1.48%	1.55%	1.75%	2.08%	2.31%	1.87%	2.21%	2.17%	2.30%	1.53%	1.63%	2.00%
XLY Consumer Discretionary Select Sector SPDR Fund	0.77%	0.79%	0.72%	0.78%	1.00%	0.53%	0.82%	1.28%	1.34%	1.20%	1.71%	1.43%

Frequently Asked Questions

Can I hold both VFH and XLY in my portfolio?

VFH and XLY have a correlation of 0.55, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, VFH or XLY?

XLY has higher volatility (6.19%) compared to VFH (4.33%). In terms of maximum drawdown, VFH dropped -78.61% vs XLY's -59.05%.

Which ETF is better, VFH or XLY?

On 10-year performance, VFH leads with 13.15% vs 12.78% for XLY. On fees, VFH is cheaper at 0.09% per year. On volatility, VFH has been the lower-risk option at 4.33%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, VFH or XLY?

Over the 10-year period, VFH has performed better with a 13.15% return vs 12.78%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, VFH or XLY?

VFH is cheaper with a 0.09% expense ratio, compared with 0.13% for XLY.

Which ETF pays a higher dividend yield, VFH or XLY?

VFH has the higher dividend yield at 1.48%, compared with 0.77% for XLY.

What is the main difference between VFH and XLY?

VFH is categorized as Financials Equities, while XLY is Consumer Discretionary Equities. VFH tracks MSCI US Investable Market Financials 25/50 Index, while XLY tracks Consumer Discretionary Select Sector Index. They also come from different issuers: Vanguard and State Street. Their fees differ too: 0.09% for VFH and 0.13% for XLY.

Which has better risk-adjusted returns?

XLY currently has the higher Sharpe Ratio (0.55 vs 0.51), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.