VPU vs XLU

VPUBVanguard Utilities ETF

XLUAState Street Utilities Select Sector SPDR ETF

In short

VPU Utilities, the whole sector, not just the S&P 500 slice. VPU tracks an index that reaches past the megacap names into mid and small utilities, about 70 in all, for 0.09% a year. Vanguard has run it since 2004.

XLU One of the original sector ETFs (1998), XLU is the plain way to own the S&P 500's utilities: roughly 30 electric, gas and water names, eight basis points a year, and one of the deepest trading markets in the category.

Stated mandate

VPU The fund seeks to track the MSCI US Investable Market Utilities 25/50 Index through a primarily full-replication, passively managed strategy.

XLU The fund seeks to track, before expenses, the price and yield performance of the Utilities Select Sector Index.

Why people hold it

• VPU At 0.09% a year, it costs roughly a quarter of the median utilities fund fee. In a sector where the holdings barely differ between funds, the fee is most of the fight.
• Its MSCI Investable Market benchmark spans large, mid and small US utilities. XLU, by contrast, drafts only from the S&P 500 universe, so the smaller names never appear.vanguard.comssga.com
• The index's 25/50 caps exist to keep any single issuer under 25% and the pile of 5%-plus names under half the fund, a guardrail in a sector with a few giants.msci.com
• Plain full replication since 2004: buy the index, hold the index. Tracking here has been among the tightest in the US utilities group.

• XLU 0.08% a year, against a utilities-fund median closer to 0.37%. Only FUTY matches it; VPU sits a basis point behind.
• Among the most actively traded funds in its category, with a market that has been running since 1998.
• A straight index build: it holds the utilities slice of the S&P 500 and tracks that index closely. Pays quarterly.ssga.com
• Cheap, liquid and tightly run, it stands among the strongest implementations in the broad utilities group.

Worth knowing

• VPU One sector, about 70 stocks. It swings on rate expectations and regulator decisions, with nothing outside utilities to cushion it.
• XLU and FUTY shave the fee to 0.08%, and XLU is the more heavily traded ticker if order size matters to you.
• Income arrives quarterly, not monthly, so the cash lands in four lumps a year.

• XLU About 30 names, all S&P 500 members. The largest utilities carry real weight, and mid and small caps sit outside the mandate; FUTY and VPU cast a wider net.ssga.com
• One sector, one country. It moves with US utilities rather than the broad market, and that concentration cuts both ways.
• Cash lands quarterly, not monthly, which matters if you are timing income.

Full VPU profile⁠

Full XLU profile⁠