The iShares MSCI EAFE ETF (EFA) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between EFA and DIA? And which fund is better?
The expense ratio of EFA is 0.16 percentage points higher than DIA’s (0.32% vs. 0.16%). EFA also has a lower exposure to the financial services sector and a higher standard deviation. Overall, EFA has provided lower returns than DIA over the past ten years.
In this article, we’ll compare EFA vs. DIA. We’ll look at fund composition and portfolio growth, as well as at their annual returns and performance. Moreover, I’ll also discuss EFA’s and DIA’s industry exposure, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| EFA | DIA | |
| Name | iShares MSCI EAFE ETF | SPDR Dow Jones Industrial Average ETF Trust |
| Category | Foreign Large Blend | Large Value |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 56.77B | 30.46B |
| Avg. Return | 6.47% | 13.35% |
| Div. Yield | 2.28% | 1.61% |
| Expense Ratio | 0.32% | 0.16% |
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 SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.
EFA’s dividend yield is 0.67% higher than that of DIA (2.28% vs. 1.61%). Also, EFA yielded on average 6.88% less per year over the past decade (6.47% vs. 13.35%). The expense ratio of EFA is 0.16 percentage points higher than DIA’s (0.32% vs. 0.16%).
Fund Composition
Industry Exposure
| EFA | DIA | |
| Technology | 9.68% | 17.32% |
| Industrials | 15.01% | 16.7% |
| Energy | 3.51% | 2.0% |
| Communication Services | 5.68% | 4.42% |
| Utilities | 3.35% | 0.0% |
| Healthcare | 12.8% | 17.92% |
| Consumer Defensive | 10.56% | 6.3% |
| Real Estate | 3.01% | 0.0% |
| Financial Services | 16.88% | 20.68% |
| Consumer Cyclical | 11.62% | 13.44% |
| Basic Materials | 7.91% | 1.21% |
The iShares MSCI EAFE ETF (EFA) has the most exposure to the Financial Services sector at 16.88%. This is followed by Industrials and Healthcare at 15.01% and 12.8% respectively. Utilities (3.35%), Energy (3.51%), and Communication Services (5.68%) only make up 12.54% of the fund’s total assets.
EFA’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.91%, 9.68%, 10.56%, 11.62%, and 12.8%.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.
DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.
EFA is 3.80% less exposed to the Financial Services sector than DIA (16.88% vs 20.68%). EFA’s exposure to Industrials and Healthcare stocks is 1.69% lower and 5.12% lower respectively (15.01% vs. 16.7% and 12.8% vs. 17.92%). In total, Utilities, Energy, and Communication Services also make up 6.12% more of the fund’s holdings compared to DIA (12.54% vs. 6.42%).
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%.
| DIA Holdings | Weight |
| UnitedHealth Group Inc | 7.63% |
| Goldman Sachs Group Inc | 7.23% |
| The Home Depot Inc | 6.07% |
| Microsoft Corp | 5.16% |
| Salesforce.com Inc | 4.65% |
| Amgen Inc | 4.64% |
| Boeing Co | 4.56% |
| Visa Inc Class A | 4.45% |
| McDonald’s Corp | 4.4% |
| Honeywell International Inc | 4.18% |
DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.
Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.
Risk Analysis
| EFA | DIA | |
| Mean Return | 0.57 | 1.13 |
| R-squared | 96.78 | 93.31 |
| Std. Deviation | 15.01 | 13.68 |
| Alpha | 0.47 | -0.94 |
| Beta | 0.98 | 0.97 |
| Sharpe Ratio | 0.41 | 0.94 |
| Treynor Ratio | 5.33 | 13.07 |
The iShares MSCI EAFE ETF (EFA) has a Treynor Ratio of 5.33 with a Standard Deviation of 15.01 and a Sharpe Ratio of 0.41. Its Beta is 0.98 while EFA’s Alpha is 0.47. Furthermore, the fund has a Mean Return of 0.57 and a R-squared of 96.78.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Beta of 0.97 with a Mean Return of 1.13 and a Sharpe Ratio of 0.94. Its R-squared is 93.31 while DIA’s Treynor Ratio is 13.07. Furthermore, the fund has a Standard Deviation of 13.68 and a Alpha of -0.94.
EFA’s Mean Return is 0.56 points lower than that of DIA and its R-squared is 3.47 points higher. With a Standard Deviation of 15.01, EFA is slightly more volatile than DIA. The Alpha and Beta of EFA are 1.41 points higher and 0.01 points higher than DIA’s Alpha and Beta.
Performance
Annual Returns
| Year | EFA | DIA |
| 2020 | 7.92% | 9.63% |
| 2019 | 21.94% | 25.09% |
| 2018 | -13.83% | -3.6% |
| 2017 | 24.94% | 27.97% |
| 2016 | 0.96% | 16.28% |
| 2015 | -0.9% | 0.1% |
| 2014 | -5.04% | 9.88% |
| 2013 | 22.62% | 29.41% |
| 2012 | 17.22% | 10.04% |
| 2011 | -12.18% | 8.21% |
| 2010 | 7.52% | 13.87% |
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 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EFA | $10,000 | $18,269 | 6.47% |
| DIA | $10,000 | $37,965 | 13.35% |
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 DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.
EFA’s CAGR is 6.88 percentage points lower than that of DIA and as a result, would have yielded $19,696 less on a $10,000 investment. Thus, EFA performed worse than DIA by 6.88% annually.
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