The iShares MSCI EAFE ETF (EFA) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between EFA and BIV? And which fund is better?
The expense ratio of EFA is 0.27 percentage points higher than BIV’s (0.32% vs. 0.05%). EFA also has a high exposure to the financial services sector while BIV is mostly comprised of AAA bonds. Overall, EFA has provided higher returns than BIV over the past ten years.
In this article, we’ll compare EFA vs. BIV. We’ll look at industry exposure and fund composition, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss EFA’s and BIV’s portfolio growth, holdings, and performance and examine how these affect their overall returns.
|Name||iShares MSCI EAFE ETF||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Foreign Large Blend||Intermediate-Term Bond|
The iShares MSCI EAFE ETF (EFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 56.77B total assets under management and has yielded an average annual return of 6.47% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.32%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
EFA’s dividend yield is 0.22% higher than that of BIV (2.28% vs. 2.06%). Also, EFA yielded on average 1.16% more per year over the past decade (6.47% vs. 5.31%). The expense ratio of EFA is 0.27 percentage points higher than BIV’s (0.32% vs. 0.05%).
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|ASML Holding NV||1.69%|
|Roche Holding AG||1.55%|
|LVMH Moet Hennessy Louis Vuitton SE||1.28%|
|Toyota Motor Corp||1.09%|
|AIA Group Ltd||0.88%|
EFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.11%, 1.69%, 1.55%, 1.28%, and 1.19%.
Toyota Motor Corp (1.09%), AstraZeneca PLC (0.92%), and Unilever PLC (0.9%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the EFA’s holdings at 0.88% and 0.86%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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The iShares MSCI EAFE ETF (EFA) has a Treynor Ratio of 5.33 with a Beta of 0.98 and a R-squared of 96.78. Its Mean Return is 0.57 while EFA’s Sharpe Ratio is 0.41. Furthermore, the fund has a Alpha of 0.47 and a Standard Deviation of 15.01.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a R-squared of 95.12 with a Standard Deviation of 4.09 and a Treynor Ratio of 2.72. Its Sharpe Ratio is 0.89 while BIV’s Mean Return is 0.35. Furthermore, the fund has a Alpha of -0.07 and a Beta of 1.33.
EFA’s Mean Return is 0.22 points higher than that of BIV and its R-squared is 1.66 points higher. With a Standard Deviation of 15.01, EFA is slightly more volatile than BIV. The Alpha and Beta of EFA are 0.54 points higher and 0.35 points lower than BIV’s Alpha and Beta.
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EFA had its best year in 2017 with an annual return of 24.94%. EFA’s worst year over the past decade yielded -13.83% and occurred in 2018. In most years the iShares MSCI EAFE ETF provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 0.96%, 7.52%, and 7.92% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in EFA would have resulted in a final balance of $18,269. This is a profit of $8,269 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.47%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
EFA’s CAGR is 1.16 percentage points higher than that of BIV and as a result, would have yielded $777 more on a $10,000 investment. Thus, EFA outperformed BIV by 1.16% annually.
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