XLU vs VPU: The Two Best Utilities ETFs — Defensive Income at Rock-Bottom Cost
XLU and VPU both deliver US utility exposure for under 0.10%. VPU holds more companies including mid-cap utilities. XLU has more trading volume and options liquidity. Both pay 3-4% yields.
XLU (Utilities Select Sector SPDR) and VPU (Vanguard Utilities ETF) are both excellent, ultra-low-cost utilities sector ETFs. XLU holds 30 S&P 500 utility companies — NextEra Energy, Southern Company, Duke Energy, and Dominion Energy dominate. VPU holds ~65 utility companies including mid-cap regulated utilities not in the S&P 500. Both charge essentially nothing: XLU 0.09%, VPU 0.10%. Utilities are the classic defensive, rate-sensitive sector — they pay large dividends, have regulated business models, and underperform in rising rate environments but hold up well in recessions. XLU's massive trading volume ($1B+/day) makes it the preferred vehicle for tactical traders and hedgers using utilities for defensive positioning. VPU's additional mid-cap coverage is a slight advantage for long-term holders.
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
Both funds trade commission-free at every major brokerage. Where to buy them →
📋 XLU vs VPU: Key Facts Side by Side
| Metric | XLU | VPU |
|---|---|---|
| Fund Name | State Street Utilities Select Sector SPDR ETF | Vanguard Utilities Index Fund ETF Shares |
| Issuer | State Street | Vanguard |
| Tracks Index | Utilities Select Sector Index | MSCI US IMI Utilities 25/50 |
| Expense Ratio | 0.09% | 0.09% |
| Cost per $10K/yr | $9.00 | $9.00 |
| AUM | $21.3B | $9.5B |
| Holdings | 30 | 65 |
| Inception | 1998 | 2004 |
| 1-Year Return | -9.20% | -9.48% |
| 3-Year Return | +15.78% | +15.84% |
| 5-Year Return | +8.50% | +8.32% |
| Dividend Yield | 3.07% | 3.04% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.01% | 0.01% |
AUM and returns updated Oct 14, 2026 from ETF BFF database; expense ratios verified against issuer filings. Returns are annualised. Not investment advice.
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📊 XLU vs VPU: Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Which Fund Fits Which Investor?
- already use State Street and prefer staying within one fund family
- want broader diversification (65 holdings vs 30)
- already use Vanguard and prefer staying within one fund family
💰 What the Fee Difference Actually Costs
Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.
Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.
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