The iShares MSCI EAFE ETF (EFA) and the Vanguard Large-Cap Index Fund ETF Shares (VV) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and VV is a Vanguard Large Blend fund. So, what’s the difference between EFA and VV? And which fund is better?
The expense ratio of EFA is 0.28 percentage points higher than VV’s (0.32% vs. 0.04%). EFA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, EFA has provided lower returns than VV over the past ten years.
In this article, we’ll compare EFA vs. VV. We’ll look at performance and risk metrics, as well as at their holdings and fund composition. Moreover, I’ll also discuss EFA’s and VV’s industry exposure, annual returns, and portfolio growth and examine how these affect their overall returns.
Summary
| EFA | VV | |
| Name | iShares MSCI EAFE ETF | Vanguard Large-Cap Index Fund ETF Shares |
| Category | Foreign Large Blend | Large Blend |
| Issuer | iShares | Vanguard |
| AUM | 56.77B | 37.65B |
| Avg. Return | 6.47% | 14.75% |
| Div. Yield | 2.28% | 1.26% |
| Expense Ratio | 0.32% | 0.04% |
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 Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.
EFA’s dividend yield is 1.02% higher than that of VV (2.28% vs. 1.26%). Also, EFA yielded on average 8.28% less per year over the past decade (6.47% vs. 14.75%). The expense ratio of EFA is 0.28 percentage points higher than VV’s (0.32% vs. 0.04%).
Fund Composition
Industry Exposure
| EFA | VV | |
| Technology | 9.68% | 25.38% |
| Industrials | 15.01% | 8.39% |
| Energy | 3.51% | 2.62% |
| Communication Services | 5.68% | 11.68% |
| Utilities | 3.35% | 2.35% |
| Healthcare | 12.8% | 13.22% |
| Consumer Defensive | 10.56% | 6.06% |
| Real Estate | 3.01% | 2.7% |
| Financial Services | 16.88% | 13.82% |
| Consumer Cyclical | 11.62% | 11.65% |
| Basic Materials | 7.91% | 2.13% |
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 Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.
VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.
EFA is 3.06% more exposed to the Financial Services sector than VV (16.88% vs 13.82%). EFA’s exposure to Industrials and Healthcare stocks is 6.62% higher and 0.42% lower respectively (15.01% vs. 8.39% and 12.8% vs. 13.22%). In total, Utilities, Energy, and Communication Services also make up 4.11% less of the fund’s holdings compared to VV (12.54% vs. 16.65%).
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%.
| VV Holdings | Weight |
| Apple Inc | 5.7% |
| Microsoft Corp | 5.35% |
| Amazon.com Inc | 3.87% |
| Facebook Inc Class A | 2.19% |
| Alphabet Inc Class A | 1.93% |
| Alphabet Inc Class C | 1.81% |
| Tesla Inc | 1.37% |
| Berkshire Hathaway Inc Class B | 1.3% |
| NVIDIA Corp | 1.24% |
| JPMorgan Chase & Co | 1.24% |
VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.
Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.
Risk Analysis
| EFA | VV | |
| Mean Return | 0.57 | 1.24 |
| R-squared | 96.78 | 99.86 |
| Std. Deviation | 15.01 | 13.75 |
| Alpha | 0.47 | -0.08 |
| Beta | 0.98 | 1.01 |
| Sharpe Ratio | 0.41 | 1.04 |
| Treynor Ratio | 5.33 | 14.14 |
The iShares MSCI EAFE ETF (EFA) has a Standard Deviation of 15.01 with a Beta of 0.98 and a Alpha of 0.47. Its Sharpe Ratio is 0.41 while EFA’s Treynor Ratio is 5.33. Furthermore, the fund has a R-squared of 96.78 and a Mean Return of 0.57.
The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Treynor Ratio of 14.14 with a Beta of 1.01 and a Standard Deviation of 13.75. Its R-squared is 99.86 while VV’s Alpha is -0.08. Furthermore, the fund has a Sharpe Ratio of 1.04 and a Mean Return of 1.24.
EFA’s Mean Return is 0.67 points lower than that of VV and its R-squared is 3.08 points lower. With a Standard Deviation of 15.01, EFA is slightly more volatile than VV. The Alpha and Beta of EFA are 0.55 points higher and 0.03 points lower than VV’s Alpha and Beta.
Performance
Annual Returns
| Year | EFA | VV |
| 2020 | 7.92% | 20.99% |
| 2019 | 21.94% | 31.39% |
| 2018 | -13.83% | -4.44% |
| 2017 | 24.94% | 22.03% |
| 2016 | 0.96% | 11.65% |
| 2015 | -0.9% | 1.07% |
| 2014 | -5.04% | 13.39% |
| 2013 | 22.62% | 32.65% |
| 2012 | 17.22% | 16.09% |
| 2011 | -12.18% | 1.58% |
| 2010 | 7.52% | 15.81% |
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 VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EFA | $10,000 | $18,269 | 6.47% |
| VV | $10,000 | $42,970 | 14.75% |
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 VV, the end total would have been $42,970. This equates to a $32,970 profit over 11 years and a compound annual growth rate (CAGR) of 14.75%.
EFA’s CAGR is 8.28 percentage points lower than that of VV and as a result, would have yielded $24,701 less on a $10,000 investment. Thus, EFA performed worse than VV by 8.28% annually.
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