EFA vs. BNDX: What’s The Difference?

The iShares MSCI EAFE ETF (EFA) and the Vanguard Total International Bond Index Fund ETF Shares (BNDX) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and BNDX is a Vanguard N/A fund. So, what’s the difference between EFA and BNDX? And which fund is better?

The expense ratio of EFA is 0.24 percentage points higher than BNDX’s (0.32% vs. 0.08%). EFA also has a high exposure to the financial services sector while BNDX is mostly comprised of A bonds. Overall, EFA has provided higher returns than BNDX over the past ten years.

In this article, we’ll compare EFA vs. BNDX. We’ll look at industry exposure and risk metrics, as well as at their annual returns and fund composition. Moreover, I’ll also discuss EFA’s and BNDX’s holdings, portfolio growth, and performance and examine how these affect their overall returns.

Summary

EFA BNDX
Name iShares MSCI EAFE ETF Vanguard Total International Bond Index Fund ETF Shares
Category Foreign Large Blend N/A
Issuer iShares Vanguard
AUM 56.77B 116.41B
Avg. Return 6.47% 4.63%
Div. Yield 2.28% 0.94%
Expense Ratio 0.32% 0.08%

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 Total International Bond Index Fund ETF Shares (BNDX) is a N/A fund that is issued by Vanguard. It currently has 116.41B total assets under management and has yielded an average annual return of 4.63% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.08%.

EFA’s dividend yield is 1.34% higher than that of BNDX (2.28% vs. 0.94%). Also, EFA yielded on average 1.84% more per year over the past decade (6.47% vs. 4.63%). The expense ratio of EFA is 0.24 percentage points higher than BNDX’s (0.32% vs. 0.08%).

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Fund Composition

Holdings

EFA - Holdings

EFA Holdings Weight
Nestle SA 2.11%
ASML Holding NV 1.69%
Roche Holding AG 1.55%
LVMH Moet Hennessy Louis Vuitton SE 1.28%
Novartis AG 1.19%
Toyota Motor Corp 1.09%
AstraZeneca PLC 0.92%
Unilever PLC 0.9%
AIA Group Ltd 0.88%
SAP SE 0.86%

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%.

BNDX - Holdings

BNDX Bond Sectors Weight
A 29.19%
AA 26.79%
AAA 21.59%
BBB 19.41%
Others 1.57%
Below B 1.45%
B 0.0%
BB 0.0%
US Government 0.0%

BNDX’s Top Bond Sectors are ratings of A, AA, AAA, BBB, and Others at 29.19%, 26.79%, 21.59%, 19.41%, and 1.57%. The fund is less weighted towards Below B (1.45%), B (0.0%), and BB (0.0%) rated bonds.

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Risk Analysis

EFA BNDX
Mean Return 0.57 0
R-squared 96.78 0
Std. Deviation 15.01 0
Alpha 0.47 0
Beta 0.98 0
Sharpe Ratio 0.41 0
Treynor Ratio 5.33 0

The iShares MSCI EAFE ETF (EFA) has a Standard Deviation of 15.01 with a Alpha of 0.47 and a Mean Return of 0.57. Its Sharpe Ratio is 0.41 while EFA’s R-squared is 96.78. Furthermore, the fund has a Treynor Ratio of 5.33 and a Beta of 0.98.

The Vanguard Total International Bond Index Fund ETF Shares (BNDX) has a R-squared of 0 with a Standard Deviation of 0 and a Treynor Ratio of 0. Its Alpha is 0 while BNDX’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.

EFA’s Mean Return is 0.57 points higher than that of BNDX and its R-squared is 96.78 points higher. With a Standard Deviation of 15.01, EFA is slightly more volatile than BNDX. The Alpha and Beta of EFA are 0.47 points higher and 0.98 points higher than BNDX’s Alpha and Beta.

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Performance

Annual Returns

EFA vs. BNDX - Annual Returns

Year EFA BNDX
2020 7.92% 4.6%
2019 21.94% 7.88%
2018 -13.83% 2.94%
2017 24.94% 2.4%
2016 0.96% 4.67%
2015 -0.9% 1.08%
2014 -5.04% 8.83%
2013 22.62% 0.0%
2012 17.22% 0.0%
2011 -12.18% 0.0%
2010 7.52% 0.0%

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 2014 was the strongest year for BNDX, returning 8.83% on an annual basis. The poorest year for BNDX in the last ten years was 2013, with a yield of 0.0%. Most years the Vanguard Total International Bond Index Fund ETF Shares has given investors modest returns, such as in 2015, 2017, and 2018, when gains were 1.08%, 2.4%, and 2.94% respectively.

Portfolio Growth

EFA vs. BNDX - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EFA $10,000 $13,460 6.47%
BNDX $10,000 $13,695 4.63%

A $10,000 investment in EFA would have resulted in a final balance of $13,460. This is a profit of $3,460 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.47%.

With a $10,000 investment in BNDX, the end total would have been $13,695. This equates to a $3,695 profit over 7 years and a compound annual growth rate (CAGR) of 4.63%.

EFA’s CAGR is 1.84 percentage points higher than that of BNDX and as a result, would have yielded $235 less on a $10,000 investment. Thus, EFA outperformed BNDX by 1.84% annually.


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