What is the primary difference between SPY and XLV?

SPY is a large blend ETF tracking the S&P 500, representing a broad cross-section of US large-cap equities across various sectors. XLV is a sector-specific ETF focused exclusively on the healthcare industry within the S&P 500. The primary distinction is scope: SPY provides diversified market-wide exposure, while XLV offers concentrated sector exposure. Investors use SPY for overall market participation and XLV for targeted healthcare sector allocation.

How do expense ratios affect long-term investment returns?

The expense ratio is an annual fee deducted from fund assets. SPY has an expense ratio of 0.09%, while XLV is 0.08%. This 0.01 percentage point difference is marginal. Over long periods, lower fees can slightly enhance net returns by reducing the drag on compound growth. However, the impact is small for most investors. The focus should be on understanding what each fund offers rather than solely on this minor fee variation.

What does 'tracking' mean for these ETFs?

The fund data indicates 'Index tracked: not available' for both. However, SPY generally seeks to replicate the S&P 500 Index, and XLV aims to track the Health Care Select Sector Index. ETFs 'track' an index by holding its constituent securities in similar weights. Differences can arise due to fees or sampling methods. Checking official fund documentation for their specific benchmarks is essential for understanding exact performance comparisons.

How does portfolio diversification compare between SPY and XLV?

SPY is diversified across the 500 largest US firms, reducing the impact of any single company or sector, though it holds major tech names like NVDA (8.16%) and AAPL (7.44%). XLV is concentrated in healthcare, with LLY at 15.17%. This means XLV's performance is tied to the healthcare sector's fortunes, lacking the broader diversification that SPY offers. SPY spreads risk; XLV focuses it.

What do the dividend yields tell us?

SPY has a dividend yield of 0.98%, while XLV offers 1.51%. This higher yield in XLV may be attractive to income-focused investors within the healthcare sector context. However, yields fluctuate with share prices and dividend payments. The difference suggests XLV's constituent companies might distribute a higher proportion of earnings relative to their share price compared to SPY's broader basket, but this varies by individual company.

Are there overlapping holdings in SPY and XLV?

Based on the provided top 10 holdings for each, there are no shared stocks between SPY (NVDA, AAPL, MSFT, AMZN, GOOGL, AVGO, GOOG, META, MU, TSLA) and XLV (LLY, JNJ, ABBV, MRK, UNH, TMO, AMGN, GILD, ABT, PFE). This zero overlap in the most significant positions highlights the distinct nature of their exposures and confirms they serve different roles within a portfolio.

How do top holdings illustrate the funds' focus?

SPY's top holdings are dominated by mega-cap technology companies like NVDA (8.16%) and AAPL (7.44%), reflecting the tech sector's current weight in the S&P 500. XLV's top holdings are all healthcare-related, led by LLY (15.17%). This demonstrates SPY's broad, technology-tilted market exposure versus XLV's concentrated focus on healthcare firms, making their performance drivers very different.

What impact does sector concentration have?

XLV is purely focused on healthcare, with LLY at 15.17%. This sector concentration means it will react strongly to healthcare-specific news like drug approvals or regulatory changes, potentially offering defensive characteristics during market stress but lacking diversification. SPY holds 500 large companies, with tech heavily represented (NVDA 8.16%), spreading risks across industries and reflecting overall US large-cap market performance.

How can investors interpret fund size?

SPY has substantial net assets of $785.0 billion, indicating high liquidity and deep market engagement, which often results in tighter bid-ask spreads for traders. XLV has $43.5 billion in assets, which is still large but significantly less than SPY. Generally, larger fund size supports efficient trading, though XLV's scale is ample for typical investor needs.

What do the inception dates signify?

SPY was launched on 22 January 1993, making it one of the earliest US ETFs and providing a long performance history. XLV began trading on 16 December 1998. SPY's longer track record offers extensive data for backtesting, while XLV, being younger, still provides a substantial history for analysing the healthcare sector's performance relative to the broader market.

SPY vs XLV

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

Compare SPY and XLV across fees, holdings and dividends. Review how each fund tracks its market and key metrics. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

SPY

Metric

XLV

0.09%

Expense Ratio

0.08%

0.98%

Dividend Yield

1.51%

$785.05B

Net Assets

$43.50B

505

Holdings

64

Jan 22, 1993

Inception Date

Dec 16, 1998

–

Index Tracked

–

Large Blend

Fund Category

Health

XLV costs about $1.00 less per year for every $10,000 invested.

Shared Top Holdings

These funds do not share any of their top holdings.

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Investment Analysis

SPY

Pros

The $785.0 billion net assets support deep liquidity and tight bid-ask spreads for active traders.
The low 0.09% expense ratio makes it highly cost-effective for broad large-cap equity exposure.
Its long history since January 1993 provides a stable, well-established vehicle for core portfolio holdings.

Considerations

Top tech holdings like NVDA at 8.16% and AAPL at 7.44% create notable concentration risk.
The 0.98% dividend yield may not sufficiently meet income-focused investor requirements.
Limited to 500 large firms, it omits small-cap opportunities, resulting in a narrow market capitalisation focus.

XLV

Pros

Defensive healthcare sector weighting offers potential relative stability during broader equity market downturns.
The 1.51% yield provides higher current income compared to the general large-cap equity market.
At 0.08% expense ratio, its costs are marginally lower than its broader S&P 500 equivalent.

Considerations

Sector concentration limits diversification, as it exclusively tracks healthcare without exposure to other industries.
LLY holding at 15.17% represents a significant single-stock risk for a sector-specific ETF.
Performance relies heavily on healthcare policy, drug pipeline successes, and specific clinical trial outcomes.

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About SPY and XLV

SPY (SPY)

SPDR S&P 500 ETF Trust (SPY) is an exchange‑traded fund designed to track the S&P 500 index, offering investors broad exposure to large‑capitalisation US equities. It is widely used by retail and institutional investors for core portfolio allocation, tactical trading and hedging because of its deep liquidity and transparent holdings. SPY distributes dividends (typically quarterly) and reflects the performance of the underlying index, so returns move with the US large‑cap market. As with any equity product, value can fall as well as rise and past performance is not a guide to the future. Costs, tax considerations and suitability will depend on an individual’s circumstances; consult official documents and consider seeking independent advice where appropriate. This summary is general educational information and not personalised investment advice.

XLV (XLV)

Health Care Select Sector SPDR (XLV) is an exchange‑traded fund that provides diversified exposure to large-cap US health‑care companies across pharmaceuticals, biotechnology, medical devices, health‑care providers and insurers. It trades like a stock, offering a simple way to gain sector-specific exposure without selecting individual companies. Investors should note sector concentration risk — performance is tied to regulatory decisions, patent cycles, drug approvals and healthcare spending trends. XLV typically offers broad, liquid exposure and may distribute dividends, but yields and performance fluctuate. Fees for passive sector ETFs are generally low compared with active funds, though expenses reduce long‑term returns. Suitable for investors seeking targeted allocation to the health‑care sector within a diversified portfolio, XLV is not a substitute for personalised advice. This is general educational information only — values can fall as well as rise and past performance is not a reliable indicator of future results.

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SPY vs XLV

Fund Snapshot