EFA vs. VLUE: What’s The Difference?

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

The expense ratio of EFA is 0.17 percentage points higher than VLUE’s (0.32% vs. 0.15%). EFA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, EFA has provided lower returns than VLUE over the past ten years.

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

Summary

EFA VLUE
Name iShares MSCI EAFE ETF iShares MSCI USA Value Factor ETF
Category Foreign Large Blend Large Value
Issuer iShares iShares
AUM 56.77B 15.95B
Avg. Return 6.47% 8.91%
Div. Yield 2.28% 1.89%
Expense Ratio 0.32% 0.15%

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 USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

EFA’s dividend yield is 0.39% higher than that of VLUE (2.28% vs. 1.89%). Also, EFA yielded on average 2.44% less per year over the past decade (6.47% vs. 8.91%). The expense ratio of EFA is 0.17 percentage points higher than VLUE’s (0.32% vs. 0.15%).

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Fund Composition

Industry Exposure

EFA vs. VLUE - Industry Exposure

EFA VLUE
Technology 9.68% 26.89%
Industrials 15.01% 9.14%
Energy 3.51% 2.42%
Communication Services 5.68% 10.39%
Utilities 3.35% 2.68%
Healthcare 12.8% 14.31%
Consumer Defensive 10.56% 7.22%
Real Estate 3.01% 3.19%
Financial Services 16.88% 10.96%
Consumer Cyclical 11.62% 10.66%
Basic Materials 7.91% 2.14%

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 USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

EFA is 5.92% more exposed to the Financial Services sector than VLUE (16.88% vs 10.96%). EFA’s exposure to Industrials and Healthcare stocks is 5.87% higher and 1.51% lower respectively (15.01% vs. 9.14% and 12.8% vs. 14.31%). In total, Utilities, Energy, and Communication Services also make up 2.95% less of the fund’s holdings compared to VLUE (12.54% vs. 15.49%).

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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

EFA VLUE
Mean Return 0.57 0
R-squared 96.78 0
Std. Deviation 15.01 0
Alpha 0.47 0
Beta 0.98 0
Sharpe Ratio 0.41 0
Treynor Ratio 5.33 0

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

The iShares MSCI USA Value Factor ETF (VLUE) has a R-squared of 0 with a Standard Deviation of 0 and a Treynor Ratio of 0. Its Mean Return is 0 while VLUE’s Sharpe Ratio is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.

EFA’s Mean Return is 0.57 points higher than that of VLUE and its R-squared is 96.78 points higher. With a Standard Deviation of 15.01, EFA is slightly more volatile than VLUE. The Alpha and Beta of EFA are 0.47 points higher and 0.98 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

EFA vs. VLUE - Annual Returns

Year EFA VLUE
2020 7.92% -0.32%
2019 21.94% 27.47%
2018 -13.83% -11.18%
2017 24.94% 21.97%
2016 0.96% 15.68%
2015 -0.9% -3.54%
2014 -5.04% 12.29%
2013 22.62% 0.0%
2012 17.22% 0.0%
2011 -12.18% 0.0%
2010 7.52% 0.0%

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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

EFA vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EFA $10,000 $13,460 6.47%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in EFA would have resulted in a final balance of $13,460. This is a profit of $3,460 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.47%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

EFA’s CAGR is 2.44 percentage points lower than that of VLUE and as a result, would have yielded $3,787 less on a $10,000 investment. Thus, EFA performed worse than VLUE by 2.44% annually.


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