XLY vs. VNQ

Last updated Jun 12, 2026

XLY (Consumer Discretionary Select Sector SPDR Fund) and VNQ (Vanguard Real Estate ETF) are both exchange-traded funds - XLY is a Consumer Discretionary Equities fund tracking the Consumer Discretionary Select Sector Index, while VNQ is a REIT fund tracking the MSCI US Investable Market Real Estate 25/50 Index. Both are passively managed. Over the past 10 years, XLY returned 12.72%/yr vs 5.53%/yr for VNQ. A 0.60 correlation means they provide meaningful diversification when combined. Both charge a 0.13% expense ratio.

Performance

XLY vs. VNQ - Performance Comparison

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

Returns By Period

In the year-to-date period, XLY achieves a -2.41% return, which is significantly lower than VNQ's 11.49% return. Over the past 10 years, XLY has outperformed VNQ with an annualized return of 12.72%, while VNQ has yielded a comparatively lower 5.53% annualized return.

XLY

• 1D: 2.48%
• 1M: -1.68%
• YTD: -2.41%
• 6M: -2.84%
• 1Y: 9.18%
• 3Y*: 13.28%
• 5Y*: 6.94%
• 10Y*: 12.72%

VNQ

• 1D: -0.07%
• 1M: 0.95%
• YTD: 11.49%
• 6M: 11.16%
• 1Y: 12.43%
• 3Y*: 10.04%
• 5Y*: 2.36%
• 10Y*: 5.53%

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

XLY vs. VNQ - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
XLY Consumer Discretionary Select Sector SPDR Fund	-2.41%	7.37%	26.51%	39.64%	-36.27%	27.93%	29.63%	28.39%	1.58%	22.82%
VNQ Vanguard Real Estate ETF	11.49%	3.24%	4.81%	11.85%	-26.25%	40.54%	-4.61%	28.91%	-6.03%	4.90%

Correlation

The correlation between XLY and VNQ is 0.37, which is low. Their price movements are largely independent, making them effective diversification partners.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.37
Correlation (3Y) Calculated over the trailing 3-year period	0.45
Correlation (5Y) Calculated over the trailing 5-year period	0.53
Correlation (10Y) Calculated over the trailing 10-year period	0.50
Correlation (All Time) Calculated using the full available price history since Sep 29, 2004	0.60

Over the past year, the correlation between XLY and VNQ has dropped to 0.37 - well below their long-term average of 0.60, suggesting their price drivers have been diverging.

XLY vs. VNQ - Sectors Allocation Comparison

Sectors	XLY	VNQ
Consumer Cyclical	97.6%	-
Communication Services	1.3%	0.6%
Technology	0.9%	0.3%
Industrials	0.1%	0.0%
Basic Materials	-	1.1%
Consumer Defensive	-	-
Energy	-	0.1%
Financial Services	-	0.1%
Healthcare	-	-
Real Estate	-	97.3%
Utilities	-	-

Return for Risk

XLY vs. VNQ — Risk / Return Rank

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

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

VNQ

VNQ Risk / Return Rank: 32
VNQ Sharpe Ratio Rank: 31
VNQ Sortino Ratio Rank: 29
VNQ Omega Ratio Rank: 29
VNQ Calmar Ratio Rank: 36
VNQ Martin Ratio Rank: 36

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.

XLY vs. VNQ - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Consumer Discretionary Select Sector SPDR Fund (XLY) and Vanguard Real Estate ETF (VNQ). 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.

	XLY	VNQ	Difference
Sharpe ratio: Return per unit of total volatility	0.50	0.92	-0.42
Sortino ratio: Return per unit of downside risk	0.83	1.35	-0.51
Omega ratio: Gain probability vs. loss probability	1.10	1.17	-0.07
Calmar ratio: Return relative to maximum drawdown	0.62	1.50	-0.88
Martin ratio: Return relative to average drawdown	1.89	4.71	-2.81

XLY vs. VNQ - Sharpe Ratio Comparison

The current XLY Sharpe Ratio is 0.50, which is lower than the VNQ Sharpe Ratio of 0.92. The chart below compares the historical Sharpe Ratios of XLY and VNQ, 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

XLY vs. VNQ - Drawdown Comparison

The maximum XLY drawdown since its inception was -59.05%, smaller than the maximum VNQ drawdown of -73.07%. Use the drawdown chart below to compare losses from any high point for XLY and VNQ.

Drawdown Indicators

	XLY	VNQ	Difference
Max Drawdown Largest peak-to-trough decline	-59.05%	-73.07%	+14.02%
Max Drawdown (1Y) Largest decline over 1 year	-14.98%	-8.34%	-6.64%
Max Drawdown (3Y) Largest decline over 3 years	-26.01%	-17.46%	-8.55%
Max Drawdown (5Y) Largest decline over 5 years	-39.67%	-34.48%	-5.19%
Max Drawdown (10Y) Largest decline over 10 years	-39.67%	-42.40%	+2.73%
Current Drawdown Current decline from peak	-6.41%	-0.49%	-5.92%
Average Drawdown Average peak-to-trough decline	-9.55%	-13.61%	+4.06%
Ulcer Index Depth and duration of drawdowns from previous peaks	4.86%	2.65%	+2.21%

Volatility

XLY vs. VNQ - Volatility Comparison

Consumer Discretionary Select Sector SPDR Fund (XLY) has a higher volatility of 6.20% compared to Vanguard Real Estate ETF (VNQ) at 4.74%. This indicates that XLY's price experiences larger fluctuations and is considered to be riskier than VNQ based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	XLY	VNQ	Difference
Volatility (1M) Calculated over the trailing 1-month period	6.20%	4.74%	+1.46%
Volatility (6M) Calculated over the trailing 6-month period	13.52%	9.74%	+3.78%
Volatility (1Y) Calculated over the trailing 1-year period	18.29%	13.52%	+4.77%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	23.84%	18.85%	+4.99%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	22.08%	20.72%	+1.36%

XLY vs. VNQ - Expense Ratio Comparison

Both XLY and VNQ have an expense ratio of 0.13%, making them cost-effective options compared to the broader market, where average expense ratios typically range from 0.3% to 0.9%.

Dividends

XLY vs. VNQ - Dividend Comparison

XLY's dividend yield for the trailing twelve months is around 0.77%, less than VNQ's 3.57% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
VNQ Vanguard Real Estate ETF	3.57%	3.92%	3.85%	3.95%	3.91%	2.56%	3.93%	3.39%	4.74%	4.23%	4.82%	3.92%
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 XLY and VNQ in my portfolio?

XLY and VNQ have a correlation of 0.37, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, XLY or VNQ?

XLY has higher volatility (6.20%) compared to VNQ (4.74%). In terms of maximum drawdown, XLY dropped -59.05% vs VNQ's -73.07%.

Which ETF is better, XLY or VNQ?

On 10-year performance, XLY leads with 12.72% vs 5.53% for VNQ. Both ETFs have the same 0.13% expense ratio. On volatility, VNQ has been the lower-risk option at 4.74%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, XLY or VNQ?

Over the 10-year period, XLY has performed better with a 12.72% return vs 5.53%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, XLY or VNQ?

XLY and VNQ have the same expense ratio: 0.13% per year.

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

VNQ has the higher dividend yield at 3.57%, compared with 0.77% for XLY.

What is the main difference between XLY and VNQ?

XLY is categorized as Consumer Discretionary Equities, while VNQ is REIT. XLY tracks Consumer Discretionary Select Sector Index, while VNQ tracks MSCI US Investable Market Real Estate 25/50 Index. They also come from different issuers: State Street and Vanguard.

Which has better risk-adjusted returns?

VNQ currently has the higher Sharpe Ratio (0.92 vs 0.50), 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.