EFA vs. IVE: What’s The Difference?

The iShares MSCI EAFE ETF (EFA) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and IVE is a iShares Large Value fund. So, what’s the difference between EFA and IVE? And which fund is better?

The expense ratio of EFA is 0.14 percentage points higher than IVE’s (0.32% vs. 0.18%). EFA also has a lower exposure to the financial services sector and a higher standard deviation. Overall, EFA has provided lower returns than IVE over the past ten years.

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

Summary

EFA IVE
Name iShares MSCI EAFE ETF iShares S&P 500 Value ETF
Category Foreign Large Blend Large Value
Issuer iShares iShares
AUM 56.77B 22.4B
Avg. Return 6.47% 11.68%
Div. Yield 2.28% 1.88%
Expense Ratio 0.32% 0.18%

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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

EFA’s dividend yield is 0.40% higher than that of IVE (2.28% vs. 1.88%). Also, EFA yielded on average 5.21% less per year over the past decade (6.47% vs. 11.68%). The expense ratio of EFA is 0.14 percentage points higher than IVE’s (0.32% vs. 0.18%).

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Fund Composition

Industry Exposure

EFA vs. IVE - Industry Exposure

EFA IVE
Technology 9.68% 9.41%
Industrials 15.01% 12.19%
Energy 3.51% 5.43%
Communication Services 5.68% 6.4%
Utilities 3.35% 4.82%
Healthcare 12.8% 15.4%
Consumer Defensive 10.56% 9.23%
Real Estate 3.01% 4.38%
Financial Services 16.88% 22.06%
Consumer Cyclical 11.62% 7.68%
Basic Materials 7.91% 2.99%

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 S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.

IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.

EFA is 5.18% less exposed to the Financial Services sector than IVE (16.88% vs 22.06%). EFA’s exposure to Industrials and Healthcare stocks is 2.82% higher and 2.60% lower respectively (15.01% vs. 12.19% and 12.8% vs. 15.4%). In total, Utilities, Energy, and Communication Services also make up 4.11% less of the fund’s holdings compared to IVE (12.54% vs. 16.65%).

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%.

IVE - Holdings

IVE Holdings Weight
Berkshire Hathaway Inc Class B 3.05%
JPMorgan Chase & Co 2.65%
The Walt Disney Co 1.85%
Bank of America Corp 1.67%
Johnson & Johnson 1.57%
Exxon Mobil Corp 1.41%
Pfizer Inc 1.38%
Cisco Systems Inc 1.35%
Verizon Communications Inc 1.33%
Intel Corp 1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

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Risk Analysis

EFA IVE
Mean Return 0.57 1.05
R-squared 96.78 92.08
Std. Deviation 15.01 14.3
Alpha 0.47 -2.9
Beta 0.98 1.01
Sharpe Ratio 0.41 0.83
Treynor Ratio 5.33 11.41

The iShares MSCI EAFE ETF (EFA) has a Beta of 0.98 with a R-squared of 96.78 and a Mean Return of 0.57. Its Treynor Ratio is 5.33 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 iShares S&P 500 Value ETF (IVE) has a Standard Deviation of 14.3 with a R-squared of 92.08 and a Alpha of -2.9. Its Sharpe Ratio is 0.83 while IVE’s Beta is 1.01. Furthermore, the fund has a Treynor Ratio of 11.41 and a Mean Return of 1.05.

EFA’s Mean Return is 0.48 points lower than that of IVE and its R-squared is 4.70 points higher. With a Standard Deviation of 15.01, EFA is slightly more volatile than IVE. The Alpha and Beta of EFA are 3.37 points higher and 0.03 points lower than IVE’s Alpha and Beta.

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Performance

Annual Returns

EFA vs. IVE - Annual Returns

Year EFA IVE
2020 7.92% 1.24%
2019 21.94% 31.71%
2018 -13.83% -9.09%
2017 24.94% 15.19%
2016 0.96% 17.17%
2015 -0.9% -3.24%
2014 -5.04% 12.14%
2013 22.62% 31.69%
2012 17.22% 17.45%
2011 -12.18% -0.63%
2010 7.52% 14.9%

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 2019 was the strongest year for IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.

Portfolio Growth

EFA vs. IVE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EFA $10,000 $18,269 6.47%
IVE $10,000 $31,350 11.68%

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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.

EFA’s CAGR is 5.21 percentage points lower than that of IVE and as a result, would have yielded $13,081 less on a $10,000 investment. Thus, EFA performed worse than IVE by 5.21% annually.


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