The iShares MSCI EAFE ETF (EFA) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between EFA and EFV? And which fund is better?
The expense ratio of EFA is 0.07 percentage points lower than EFV’s (0.32% vs. 0.39%). EFA also has a lower exposure to the financial services sector and a lower standard deviation. Overall, EFA has provided higher returns than EFV over the past ten years.
In this article, we’ll compare EFA vs. EFV. We’ll look at holdings and fund composition, as well as at their performance and industry exposure. Moreover, I’ll also discuss EFA’s and EFV’s risk metrics, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||iShares MSCI EAFE ETF||iShares MSCI EAFE Value ETF|
|Category||Foreign Large Blend||Foreign Large Value|
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 iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
EFA’s dividend yield is 0.66% lower than that of EFV (2.28% vs. 2.94%). Also, EFA yielded on average 2.48% more per year over the past decade (6.47% vs. 3.99%). The expense ratio of EFA is 0.07 percentage points lower than EFV’s (0.32% vs. 0.39%).
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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 iShares MSCI EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.
EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.
EFA is 9.67% less exposed to the Financial Services sector than EFV (16.88% vs 26.55%). EFA’s exposure to Industrials and Healthcare stocks is 3.41% higher and 3.61% higher respectively (15.01% vs. 11.6% and 12.8% vs. 9.19%). In total, Utilities, Energy, and Communication Services also make up 6.66% less of the fund’s holdings compared to EFV (12.54% vs. 19.20%).
|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%.
|Toyota Motor Corp||2.21%|
|Commonwealth Bank of Australia||1.59%|
|HSBC Holdings PLC||1.4%|
|Rio Tinto PLC||1.1%|
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
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The iShares MSCI EAFE ETF (EFA) has a Beta of 0.98 with a Standard Deviation of 15.01 and a Treynor Ratio of 5.33. Its R-squared is 96.78 while EFA’s Alpha is 0.47. Furthermore, the fund has a Mean Return of 0.57 and a Sharpe Ratio of 0.41.
The iShares MSCI EAFE Value ETF (EFV) has a Sharpe Ratio of 0.26 with a Standard Deviation of 16.53 and a Mean Return of 0.42. Its R-squared is 92.15 while EFV’s Treynor Ratio is 2.92. Furthermore, the fund has a Beta of 1.05 and a Alpha of -1.77.
EFA’s Mean Return is 0.15 points higher than that of EFV and its R-squared is 4.63 points higher. With a Standard Deviation of 15.01, EFA is slightly less volatile than EFV. The Alpha and Beta of EFA are 2.24 points higher and 0.07 points lower than EFV’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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% 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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
EFA’s CAGR is 2.48 percentage points higher than that of EFV and as a result, would have yielded $4,135 more on a $10,000 investment. Thus, EFA outperformed EFV by 2.48% annually.
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