The iShares MSCI EAFE ETF (EFA) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between EFA and VXF? And which fund is better?
The expense ratio of EFA is 0.26 percentage points higher than VXF’s (0.32% vs. 0.06%). EFA also has a higher exposure to the financial services sector and a lower standard deviation. Overall, EFA has provided lower returns than VXF over the past ten years.
In this article, we’ll compare EFA vs. VXF. We’ll look at fund composition and performance, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss EFA’s and VXF’s annual returns, holdings, and risk metrics and examine how these affect their overall returns.
|Name||iShares MSCI EAFE ETF||Vanguard Extended Market Index Fund ETF Shares|
|Category||Foreign Large Blend||Mid-Cap Growth|
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
EFA’s dividend yield is 1.09% higher than that of VXF (2.28% vs. 1.19%). Also, EFA yielded on average 9.00% less per year over the past decade (6.47% vs. 15.47%). The expense ratio of EFA is 0.26 percentage points higher than VXF’s (0.32% vs. 0.06%).
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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
EFA is 4.32% more exposed to the Financial Services sector than VXF (16.88% vs 12.56%). EFA’s exposure to Industrials and Healthcare stocks is 3.70% higher and 2.45% lower respectively (15.01% vs. 11.31% and 12.8% vs. 15.25%). In total, Utilities, Energy, and Communication Services also make up 1.14% more of the fund’s holdings compared to VXF (12.54% vs. 11.40%).
|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%.
|Square Inc A||1.2%|
|Zoom Video Communications Inc||1.04%|
|Uber Technologies Inc||0.93%|
|Blackstone Group Inc||0.83%|
|Snap Inc Class A||0.8%|
|Twilio Inc A||0.73%|
|CrowdStrike Holdings Inc Class A||0.63%|
|Marvell Technology Inc||0.6%|
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
The iShares MSCI EAFE ETF (EFA) has a Alpha of 0.47 with a Standard Deviation of 15.01 and a R-squared of 96.78. Its Beta is 0.98 while EFA’s Mean Return is 0.57. Furthermore, the fund has a Treynor Ratio of 5.33 and a Sharpe Ratio of 0.41.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a R-squared of 85.73 with a Sharpe Ratio of 0.79 and a Alpha of -3.26. Its Beta is 1.23 while VXF’s Standard Deviation is 18.04. Furthermore, the fund has a Treynor Ratio of 10.92 and a Mean Return of 1.24.
EFA’s Mean Return is 0.67 points lower than that of VXF and its R-squared is 11.05 points higher. With a Standard Deviation of 15.01, EFA is slightly less volatile than VXF. The Alpha and Beta of EFA are 3.73 points higher and 0.25 points lower than VXF’s Alpha and Beta.
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% 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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
EFA’s CAGR is 9.00 percentage points lower than that of VXF and as a result, would have yielded $25,861 less on a $10,000 investment. Thus, EFA performed worse than VXF by 9.00% annually.
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