The iShares MSCI EAFE ETF (EFA) and the Vanguard Total International Stock Index Fund ETF Shares (VXUS) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and VXUS is a Vanguard Foreign Large Blend fund. So, what’s the difference between EFA and VXUS? And which fund is better?
The expense ratio of EFA is 0.24 percentage points higher than VXUS’s (0.32% vs. 0.08%). EFA also has a lower exposure to the financial services sector and a lower standard deviation. Overall, EFA has provided lower returns than VXUS over the past ten years.
In this article, we’ll compare EFA vs. VXUS. We’ll look at risk metrics and performance, as well as at their holdings and fund composition. Moreover, I’ll also discuss EFA’s and VXUS’s annual returns, portfolio growth, and industry exposure and examine how these affect their overall returns.
Summary
| EFA | VXUS | |
| Name | iShares MSCI EAFE ETF | Vanguard Total International Stock Index Fund ETF Shares |
| Category | Foreign Large Blend | Foreign Large Blend |
| Issuer | iShares | Vanguard |
| AUM | 56.77B | 404.73B |
| Avg. Return | 6.47% | 8.41% |
| Div. Yield | 2.28% | 2.44% |
| Expense Ratio | 0.32% | 0.08% |
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 Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
EFA’s dividend yield is 0.16% lower than that of VXUS (2.28% vs. 2.44%). Also, EFA yielded on average 1.94% less per year over the past decade (6.47% vs. 8.41%). The expense ratio of EFA is 0.24 percentage points higher than VXUS’s (0.32% vs. 0.08%).
Fund Composition
Industry Exposure
| EFA | VXUS | |
| Technology | 9.68% | 13.07% |
| Industrials | 15.01% | 12.94% |
| Energy | 3.51% | 4.55% |
| Communication Services | 5.68% | 7.06% |
| Utilities | 3.35% | 2.94% |
| Healthcare | 12.8% | 9.19% |
| Consumer Defensive | 10.56% | 7.83% |
| Real Estate | 3.01% | 3.79% |
| Financial Services | 16.88% | 17.64% |
| Consumer Cyclical | 11.62% | 12.64% |
| Basic Materials | 7.91% | 8.37% |
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 Total International Stock Index Fund ETF Shares (VXUS) has the most exposure to the Financial Services sector at 17.64%. This is followed by Technology and Industrials at 13.07% and 12.94% respectively. Real Estate (3.79%), Energy (4.55%), and Communication Services (7.06%) only make up 15.40% of the fund’s total assets.
VXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 7.83%, 8.37%, 9.19%, 12.64%, and 12.94%.
EFA is 0.76% less exposed to the Financial Services sector than VXUS (16.88% vs 17.64%). EFA’s exposure to Industrials and Healthcare stocks is 2.07% higher and 3.61% higher respectively (15.01% vs. 12.94% and 12.8% vs. 9.19%). In total, Utilities, Energy, and Communication Services also make up 2.01% less of the fund’s holdings compared to VXUS (12.54% vs. 14.55%).
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%.
| VXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.62% |
| Tencent Holdings Ltd | 1.41% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.26% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.05% |
| ASML Holding NV | 0.86% |
| Roche Holding AG | 0.81% |
| Toyota Motor Corp | 0.67% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.61% |
| Novartis AG | 0.6% |
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
Risk Analysis
| EFA | VXUS | |
| Mean Return | 0.57 | 0.56 |
| R-squared | 96.78 | 98.39 |
| Std. Deviation | 15.01 | 15.12 |
| Alpha | 0.47 | 0.31 |
| Beta | 0.98 | 0.99 |
| Sharpe Ratio | 0.41 | 0.4 |
| Treynor Ratio | 5.33 | 5.14 |
The iShares MSCI EAFE ETF (EFA) has a Mean Return of 0.57 with a Sharpe Ratio of 0.41 and a R-squared of 96.78. Its Beta is 0.98 while EFA’s Treynor Ratio is 5.33. Furthermore, the fund has a Alpha of 0.47 and a Standard Deviation of 15.01.
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Standard Deviation of 15.12 with a Mean Return of 0.56 and a R-squared of 98.39. Its Sharpe Ratio is 0.4 while VXUS’s Beta is 0.99. Furthermore, the fund has a Alpha of 0.31 and a Treynor Ratio of 5.14.
EFA’s Mean Return is 0.01 points higher than that of VXUS and its R-squared is 1.61 points lower. With a Standard Deviation of 15.01, EFA is slightly less volatile than VXUS. The Alpha and Beta of EFA are 0.16 points higher and 0.01 points lower than VXUS’s Alpha and Beta.
Performance
Annual Returns
| Year | EFA | VXUS |
| 2020 | 7.92% | 11.32% |
| 2019 | 21.94% | 21.58% |
| 2018 | -13.83% | -14.42% |
| 2017 | 24.94% | 27.52% |
| 2016 | 0.96% | 4.72% |
| 2015 | -0.9% | -4.28% |
| 2014 | -5.04% | -4.17% |
| 2013 | 22.62% | 15.16% |
| 2012 | 17.22% | 18.22% |
| 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 2017 was the strongest year for VXUS, returning 27.52% on an annual basis. The poorest year for VXUS in the last ten years was 2018, with a yield of -14.42%. Most years the Vanguard Total International Stock Index Fund ETF Shares has given investors modest returns, such as in 2010, 2016, and 2020, when gains were 0.0%, 4.72%, and 11.32% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EFA | $10,000 | $19,347 | 6.47% |
| VXUS | $10,000 | $19,315 | 8.41% |
A $10,000 investment in EFA would have resulted in a final balance of $19,347. This is a profit of $9,347 over 9 years and amounts to a compound annual growth rate (CAGR) of 6.47%.
With a $10,000 investment in VXUS, the end total would have been $19,315. This equates to a $9,315 profit over 9 years and a compound annual growth rate (CAGR) of 8.41%.
EFA’s CAGR is 1.94 percentage points lower than that of VXUS and as a result, would have yielded $32 more on a $10,000 investment. Thus, EFA performed worse than VXUS by 1.94% annually.
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