The iShares MSCI EAFE ETF (EFA) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between EFA and IWP? And which fund is better?
The expense ratio of EFA is 0.08 percentage points higher than IWP’s (0.32% vs. 0.24%). EFA also has a higher exposure to the financial services sector and a lower standard deviation. Overall, EFA has provided lower returns than IWP over the past ten years.
In this article, we’ll compare EFA vs. IWP. We’ll look at holdings and industry exposure, as well as at their risk metrics and performance. Moreover, I’ll also discuss EFA’s and IWP’s fund composition, portfolio growth, and annual returns and examine how these affect their overall returns.
|Name||iShares MSCI EAFE ETF||iShares Russell Mid-Cap Growth ETF|
|Category||Foreign Large Blend||Mid-Cap Growth|
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 Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.
EFA’s dividend yield is 2.02% higher than that of IWP (2.28% vs. 0.26%). Also, EFA yielded on average 10.28% less per year over the past decade (6.47% vs. 16.75%). The expense ratio of EFA is 0.08 percentage points higher than IWP’s (0.32% vs. 0.24%).
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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 Russell Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.
IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.
EFA is 12.36% more exposed to the Financial Services sector than IWP (16.88% vs 4.52%). EFA’s exposure to Industrials and Healthcare stocks is 0.92% higher and 3.99% lower respectively (15.01% vs. 14.09% and 12.8% vs. 16.79%). In total, Utilities, Energy, and Communication Services also make up 4.55% more of the fund’s holdings compared to IWP (12.54% vs. 7.99%).
|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%.
|IDEXX Laboratories Inc||1.3%|
|Roku Inc Class A||1.29%|
|Match Group Inc||1.06%|
|Chipotle Mexican Grill Inc||1.06%|
|Veeva Systems Inc Class A||1.04%|
|Palantir Technologies Inc Ordinary Shares – Class A||1.04%|
|Lululemon Athletica Inc||1.01%|
IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.
Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.
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The iShares MSCI EAFE ETF (EFA) has a Sharpe Ratio of 0.41 with a Alpha of 0.47 and a Standard Deviation of 15.01. Its Treynor Ratio is 5.33 while EFA’s Mean Return is 0.57. Furthermore, the fund has a Beta of 0.98 and a R-squared of 96.78.
The iShares Russell Mid-Cap Growth ETF (IWP) has a Sharpe Ratio of 0.91 with a Alpha of -1.03 and a Beta of 1.1. Its Standard Deviation is 16.05 while IWP’s R-squared is 87.01. Furthermore, the fund has a Mean Return of 1.27 and a Treynor Ratio of 12.98.
EFA’s Mean Return is 0.70 points lower than that of IWP and its R-squared is 9.77 points higher. With a Standard Deviation of 15.01, EFA is slightly less volatile than IWP. The Alpha and Beta of EFA are 1.50 points higher and 0.12 points lower than IWP’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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% 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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.
EFA’s CAGR is 10.28 percentage points lower than that of IWP and as a result, would have yielded $31,922 less on a $10,000 investment. Thus, EFA performed worse than IWP by 10.28% annually.
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