XLF vs. QUAL

Last updated Jun 9, 2026

XLF (State Street Financial Select Sector SPDR ETF) and QUAL (iShares MSCI USA Quality Factor ETF) are both exchange-traded funds - XLF is a Financials Equities fund tracking the Financial Select Sector Index, while QUAL is a Large Cap Blend Equities fund tracking the MSCI USA Sector Neutral Quality Index. Both are passively managed. Over the past 10 years, XLF returned 12.79%/yr vs 14.19%/yr for QUAL. A 0.73 correlation means they provide meaningful diversification when combined. XLF charges 0.08%/yr vs 0.15%/yr for QUAL.

Performance

XLF vs. QUAL - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in State Street Financial Select Sector SPDR ETF (XLF) and iShares MSCI USA Quality Factor ETF (QUAL). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, XLF achieves a -4.62% return, which is significantly lower than QUAL's 7.89% return. Over the past 10 years, XLF has underperformed QUAL with an annualized return of 12.79%, while QUAL has yielded a comparatively higher 14.19% annualized return.

XLF

• 1D: -0.63%
• 1M: 1.42%
• YTD: -4.62%
• 6M: -1.98%
• 1Y: 2.91%
• 3Y*: 18.06%
• 5Y*: 8.47%
• 10Y*: 12.79%

QUAL

• 1D: 0.32%
• 1M: 1.62%
• YTD: 7.89%
• 6M: 8.26%
• 1Y: 19.70%
• 3Y*: 19.43%
• 5Y*: 11.82%
• 10Y*: 14.19%

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

XLF vs. QUAL - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
XLF State Street Financial Select Sector SPDR ETF	-4.62%	14.90%	30.56%	12.03%	-10.59%	34.80%	-1.74%	31.88%	-13.06%	22.00%
QUAL iShares MSCI USA Quality Factor ETF	7.89%	12.65%	22.29%	30.88%	-20.50%	26.94%	17.04%	33.89%	-5.70%	22.26%

Correlation

The correlation between XLF and QUAL is 0.67, 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	0.67
Correlation (3Y) Calculated over the trailing 3-year period	0.64
Correlation (5Y) Calculated over the trailing 5-year period	0.71
Correlation (10Y) Calculated over the trailing 10-year period	0.70
Correlation (All Time) Calculated using the full available price history since Jul 18, 2013	0.73

The correlation between XLF and QUAL has been stable across timeframes, ranging from 0.64 to 0.73 - a consistent structural relationship.

XLF vs. QUAL - Sectors Allocation Comparison

Sectors	XLF	QUAL
Financial Services	98.0%	11.5%
Technology	1.8%	36.5%
Industrials	0.2%	8.2%
Basic Materials	-	1.7%
Communication Services	-	11.1%
Consumer Cyclical	-	9.3%
Consumer Defensive	-	4.9%
Energy	-	4.0%
Healthcare	-	9.0%
Real Estate	-	1.8%
Utilities	-	1.9%

Return for Risk

XLF vs. QUAL — Risk / Return Rank

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

XLF

XLF Risk / Return Rank: 12
XLF Sharpe Ratio Rank: 12
XLF Sortino Ratio Rank: 12
XLF Omega Ratio Rank: 12
XLF Calmar Ratio Rank: 12
XLF Martin Ratio Rank: 12

QUAL

QUAL Risk / Return Rank: 54
QUAL Sharpe Ratio Rank: 53
QUAL Sortino Ratio Rank: 53
QUAL Omega Ratio Rank: 52
QUAL Calmar Ratio Rank: 49
QUAL Martin Ratio Rank: 61

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.

XLF vs. QUAL - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for State Street Financial Select Sector SPDR ETF (XLF) and iShares MSCI USA Quality Factor ETF (QUAL). 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.

	XLF	QUAL	Difference
Sharpe ratio: Return per unit of total volatility	0.20	1.65	-1.45
Sortino ratio: Return per unit of downside risk	0.37	2.34	-1.97
Omega ratio: Gain probability vs. loss probability	1.05	1.29	-0.25
Calmar ratio: Return relative to maximum drawdown	0.20	2.19	-1.99
Martin ratio: Return relative to average drawdown	0.51	9.96	-9.45
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

XLF vs. QUAL - Sharpe Ratio Comparison

The current XLF Sharpe Ratio is 0.20, which is lower than the QUAL Sharpe Ratio of 1.65. The chart below compares the historical Sharpe Ratios of XLF and QUAL, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	XLF	QUAL	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	0.20	1.65	-1.45
Sharpe Ratio (5Y) Calculated over the trailing 5-year period	0.46	0.68	-0.23
Sharpe Ratio (10Y) Calculated over the trailing 10-year period	0.58	0.79	-0.21
Sharpe Ratio (All Time) Calculated using the full available price history	0.21	0.80	-0.59

Drawdowns

XLF vs. QUAL - Drawdown Comparison

The maximum XLF drawdown since its inception was -82.69%, which is greater than QUAL's maximum drawdown of -34.06%. Use the drawdown chart below to compare losses from any high point for XLF and QUAL.

Drawdown Indicators

	XLF	QUAL	Difference
Max Drawdown Largest peak-to-trough decline	-82.69%	-34.06%	-48.63%
Max Drawdown (1Y) Largest decline over 1 year	-14.79%	-9.03%	-5.76%
Max Drawdown (3Y) Largest decline over 3 years	-15.54%	-18.00%	+2.46%
Max Drawdown (5Y) Largest decline over 5 years	-25.81%	-28.23%	+2.42%
Max Drawdown (10Y) Largest decline over 10 years	-42.86%	-34.06%	-8.80%
Current Drawdown Current decline from peak	-7.38%	-1.61%	-5.77%
Average Drawdown Average peak-to-trough decline	-20.02%	-4.10%	-15.92%
Ulcer Index Depth and duration of drawdowns from previous peaks	5.71%	1.98%	+3.73%

Volatility

XLF vs. QUAL - Volatility Comparison

State Street Financial Select Sector SPDR ETF (XLF) has a higher volatility of 4.20% compared to iShares MSCI USA Quality Factor ETF (QUAL) at 3.12%. This indicates that XLF's price experiences larger fluctuations and is considered to be riskier than QUAL based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	XLF	QUAL	Difference
Volatility (1M) Calculated over the trailing 1-month period	4.20%	3.12%	+1.08%
Volatility (6M) Calculated over the trailing 6-month period	11.18%	9.28%	+1.90%
Volatility (1Y) Calculated over the trailing 1-year period	14.61%	12.01%	+2.60%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	18.66%	17.35%	+1.31%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	22.18%	18.11%	+4.07%

XLF vs. QUAL - Expense Ratio Comparison

XLF has a 0.08% expense ratio, which is lower than QUAL's 0.15% 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

XLF vs. QUAL - Dividend Comparison

XLF's dividend yield for the trailing twelve months is around 1.52%, more than QUAL's 0.88% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
QUAL iShares MSCI USA Quality Factor ETF	0.88%	0.94%	1.02%	1.23%	1.59%	1.20%	1.39%	1.60%	2.00%	1.76%	1.96%	1.63%
XLF State Street Financial Select Sector SPDR ETF	1.52%	1.31%	1.42%	1.71%	2.04%	1.63%	2.03%	1.87%	2.08%	1.48%	21.10%	1.95%

Frequently Asked Questions

Can I hold both XLF and QUAL in my portfolio?

XLF and QUAL have a correlation of 0.67, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, XLF or QUAL?

XLF has higher volatility (4.20%) compared to QUAL (3.12%). In terms of maximum drawdown, XLF dropped -82.69% vs QUAL's -34.06%.

Which ETF is better, XLF or QUAL?

On 10-year performance, QUAL leads with 14.19% vs 12.79% for XLF. On fees, XLF is cheaper at 0.08% per year. On volatility, QUAL has been the lower-risk option at 3.12%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, XLF or QUAL?

Over the 10-year period, QUAL has performed better with a 14.19% return vs 12.79%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, XLF or QUAL?

XLF is cheaper with a 0.08% expense ratio, compared with 0.15% for QUAL.

Which ETF pays a higher dividend yield, XLF or QUAL?

XLF has the higher dividend yield at 1.52%, compared with 0.88% for QUAL.

What is the main difference between XLF and QUAL?

XLF is categorized as Financials Equities, while QUAL is Large Cap Blend Equities. XLF tracks Financial Select Sector Index, while QUAL tracks MSCI USA Sector Neutral Quality Index. They also come from different issuers: State Street and iShares. Their fees differ too: 0.08% for XLF and 0.15% for QUAL.

Which has better risk-adjusted returns?

QUAL currently has the higher Sharpe Ratio (1.65 vs 0.20), 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.