EFA vs. SDY: What’s The Difference?

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

The expense ratio of EFA is 0.03 percentage points lower than SDY’s (0.32% vs. 0.35%). EFA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, EFA has provided lower returns than SDY over the past ten years.

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

Summary

EFA SDY
Name iShares MSCI EAFE ETF SPDR S&P Dividend ETF
Category Foreign Large Blend Large Value
Issuer iShares SPDR State Street Global Advisors
AUM 56.77B 19.67B
Avg. Return 6.47% 12.44%
Div. Yield 2.28% 2.65%
Expense Ratio 0.32% 0.35%

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 S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

EFA’s dividend yield is 0.37% lower than that of SDY (2.28% vs. 2.65%). Also, EFA yielded on average 5.97% less per year over the past decade (6.47% vs. 12.44%). The expense ratio of EFA is 0.03 percentage points lower than SDY’s (0.32% vs. 0.35%).

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Fund Composition

Industry Exposure

EFA vs. SDY - Industry Exposure

EFA SDY
Technology 9.68% 2.0%
Industrials 15.01% 15.89%
Energy 3.51% 5.95%
Communication Services 5.68% 4.64%
Utilities 3.35% 12.14%
Healthcare 12.8% 7.35%
Consumer Defensive 10.56% 14.01%
Real Estate 3.01% 6.57%
Financial Services 16.88% 16.32%
Consumer Cyclical 11.62% 8.68%
Basic Materials 7.91% 6.45%

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 S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

EFA is 0.56% more exposed to the Financial Services sector than SDY (16.88% vs 16.32%). EFA’s exposure to Industrials and Healthcare stocks is 0.88% lower and 5.45% higher respectively (15.01% vs. 15.89% and 12.8% vs. 7.35%). In total, Utilities, Energy, and Communication Services also make up 10.19% less of the fund’s holdings compared to SDY (12.54% vs. 22.73%).

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%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

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Risk Analysis

EFA SDY
Mean Return 0.57 1.07
R-squared 96.78 83.62
Std. Deviation 15.01 12.9
Alpha 0.47 -0.1
Beta 0.98 0.87
Sharpe Ratio 0.41 0.95
Treynor Ratio 5.33 13.94

The iShares MSCI EAFE ETF (EFA) has a Mean Return of 0.57 with a Sharpe Ratio of 0.41 and a Alpha of 0.47. Its R-squared is 96.78 while EFA’s Beta is 0.98. Furthermore, the fund has a Standard Deviation of 15.01 and a Treynor Ratio of 5.33.

The SPDR S&P Dividend ETF (SDY) has a Alpha of -0.1 with a Treynor Ratio of 13.94 and a Mean Return of 1.07. Its Sharpe Ratio is 0.95 while SDY’s Standard Deviation is 12.9. Furthermore, the fund has a Beta of 0.87 and a R-squared of 83.62.

EFA’s Mean Return is 0.50 points lower than that of SDY and its R-squared is 13.16 points higher. With a Standard Deviation of 15.01, EFA is slightly more volatile than SDY. The Alpha and Beta of EFA are 0.57 points higher and 0.11 points higher than SDY’s Alpha and Beta.

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Performance

Annual Returns

EFA vs. SDY - Annual Returns

Year EFA SDY
2020 7.92% 1.78%
2019 21.94% 23.37%
2018 -13.83% -2.73%
2017 24.94% 15.84%
2016 0.96% 20.17%
2015 -0.9% -0.7%
2014 -5.04% 13.8%
2013 22.62% 30.09%
2012 17.22% 11.51%
2011 -12.18% 7.28%
2010 7.52% 16.41%

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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

EFA vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EFA $10,000 $18,269 6.47%
SDY $10,000 $34,806 12.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

EFA’s CAGR is 5.97 percentage points lower than that of SDY and as a result, would have yielded $16,537 less on a $10,000 investment. Thus, EFA performed worse than SDY by 5.97% annually.


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