EFA vs. VOE: What’s The Difference?

The iShares MSCI EAFE ETF (EFA) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between EFA and VOE? And which fund is better?

The expense ratio of EFA is 0.25 percentage points higher than VOE’s (0.32% vs. 0.07%). EFA also has a lower exposure to the financial services sector and a lower standard deviation. Overall, EFA has provided lower returns than VOE over the past ten years.

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

Summary

EFA VOE
Name iShares MSCI EAFE ETF Vanguard Mid-Cap Value Index Fund ETF Shares
Category Foreign Large Blend Mid-Cap Value
Issuer iShares Vanguard
AUM 56.77B 26.78B
Avg. Return 6.47% 12.52%
Div. Yield 2.28% 1.87%
Expense Ratio 0.32% 0.07%

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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

EFA’s dividend yield is 0.41% higher than that of VOE (2.28% vs. 1.87%). Also, EFA yielded on average 6.05% less per year over the past decade (6.47% vs. 12.52%). The expense ratio of EFA is 0.25 percentage points higher than VOE’s (0.32% vs. 0.07%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

EFA vs. VOE - Industry Exposure

EFA VOE
Technology 9.68% 9.85%
Industrials 15.01% 9.4%
Energy 3.51% 5.69%
Communication Services 5.68% 5.27%
Utilities 3.35% 10.93%
Healthcare 12.8% 7.04%
Consumer Defensive 10.56% 4.85%
Real Estate 3.01% 11.48%
Financial Services 16.88% 18.26%
Consumer Cyclical 11.62% 11.8%
Basic Materials 7.91% 5.44%

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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

EFA is 1.38% less exposed to the Financial Services sector than VOE (16.88% vs 18.26%). EFA’s exposure to Industrials and Healthcare stocks is 5.61% higher and 5.76% higher respectively (15.01% vs. 9.4% and 12.8% vs. 7.04%). In total, Utilities, Energy, and Communication Services also make up 9.35% less of the fund’s holdings compared to VOE (12.54% vs. 21.89%).

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%.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

EFA VOE
Mean Return 0.57 1.05
R-squared 96.78 88.76
Std. Deviation 15.01 15.98
Alpha 0.47 -3.77
Beta 0.98 1.11
Sharpe Ratio 0.41 0.75
Treynor Ratio 5.33 10.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Treynor Ratio of 10.19 with a Standard Deviation of 15.98 and a R-squared of 88.76. Its Alpha is -3.77 while VOE’s Beta is 1.11. Furthermore, the fund has a Mean Return of 1.05 and a Sharpe Ratio of 0.75.

EFA’s Mean Return is 0.48 points lower than that of VOE and its R-squared is 8.02 points higher. With a Standard Deviation of 15.01, EFA is slightly less volatile than VOE. The Alpha and Beta of EFA are 4.24 points higher and 0.13 points lower than VOE’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

EFA vs. VOE - Annual Returns

Year EFA VOE
2020 7.92% 2.5%
2019 21.94% 27.98%
2018 -13.83% -12.41%
2017 24.94% 17.05%
2016 0.96% 15.26%
2015 -0.9% -1.8%
2014 -5.04% 13.98%
2013 22.62% 37.65%
2012 17.22% 16.04%
2011 -12.18% -0.32%
2010 7.52% 21.83%

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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

EFA vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EFA $10,000 $18,269 6.47%
VOE $10,000 $33,655 12.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

EFA’s CAGR is 6.05 percentage points lower than that of VOE and as a result, would have yielded $15,386 less on a $10,000 investment. Thus, EFA performed worse than VOE by 6.05% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply