The iShares MSCI EAFE ETF (EFA) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between EFA and IWS? And which fund is better?
The expense ratio of EFA is 0.09 percentage points higher than IWS’s (0.32% vs. 0.23%). EFA also has a higher exposure to the financial services sector and a lower standard deviation. Overall, EFA has provided lower returns than IWS over the past ten years.
In this article, we’ll compare EFA vs. IWS. We’ll look at fund composition and holdings, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss EFA’s and IWS’s risk metrics, annual returns, and performance and examine how these affect their overall returns.
|Name||iShares MSCI EAFE ETF||iShares Russell Mid-Cap Value ETF|
|Category||Foreign Large Blend||Mid-Cap 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 Russell Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
EFA’s dividend yield is 0.94% higher than that of IWS (2.28% vs. 1.34%). Also, EFA yielded on average 5.88% less per year over the past decade (6.47% vs. 12.35%). The expense ratio of EFA is 0.09 percentage points higher than IWS’s (0.32% vs. 0.23%).
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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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.
IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.
EFA is 1.13% more exposed to the Financial Services sector than IWS (16.88% vs 15.75%). EFA’s exposure to Industrials and Healthcare stocks is 0.41% higher and 4.24% higher respectively (15.01% vs. 14.6% and 12.8% vs. 8.56%). In total, Utilities, Energy, and Communication Services also make up 3.22% less of the fund’s holdings compared to IWS (12.54% vs. 15.76%).
|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%.
|Marvell Technology Inc||0.69%|
|IHS Markit Ltd||0.62%|
|Prudential Financial Inc||0.56%|
|Otis Worldwide Corp Ordinary Shares||0.54%|
|International Flavors & Fragrances Inc||0.53%|
|Xcel Energy Inc||0.52%|
|Motorola Solutions Inc||0.52%|
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
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The iShares MSCI EAFE ETF (EFA) has a R-squared of 96.78 with a Standard Deviation of 15.01 and a Sharpe Ratio of 0.41. Its Treynor Ratio is 5.33 while EFA’s Beta is 0.98. Furthermore, the fund has a Mean Return of 0.57 and a Alpha of 0.47.
The iShares Russell Mid-Cap Value ETF (IWS) has a Treynor Ratio of 10.3 with a Mean Return of 1.06 and a Beta of 1.1. Its Standard Deviation is 16.03 while IWS’s Alpha is -4.11. Furthermore, the fund has a R-squared of 87.04 and a Sharpe Ratio of 0.75.
EFA’s Mean Return is 0.49 points lower than that of IWS and its R-squared is 9.74 points higher. With a Standard Deviation of 15.01, EFA is slightly less volatile than IWS. The Alpha and Beta of EFA are 4.58 points higher and 0.12 points lower than IWS’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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% 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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.
EFA’s CAGR is 5.88 percentage points lower than that of IWS and as a result, would have yielded $14,814 less on a $10,000 investment. Thus, EFA performed worse than IWS by 5.88% annually.
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