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EFV vs. GOVT: What’s The Difference?

The iShares MSCI EAFE Value ETF (EFV) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. EFV is a iShares Foreign Large Value fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between EFV and GOVT? And which fund is better?

The expense ratio of EFV is 0.34 percentage points higher than GOVT’s (0.39% vs. 0.05%). EFV also has a high exposure to the financial services sector while GOVT is mostly comprised of AAA bonds. Overall, EFV has provided higher returns than GOVT over the past 8 years.

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

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Summary

EFVGOVT
NameiShares MSCI EAFE Value ETFiShares U.S. Treasury Bond ETF
CategoryForeign Large ValueIntermediate Government
IssueriSharesiShares
AUM14.37B17.07B
Avg. Return3.99%2.67%
Div. Yield2.94%1.0%
Expense Ratio0.39%0.05%

The iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.

The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

EFV’s dividend yield is 1.94% higher than that of GOVT (2.94% vs. 1.0%). Also, EFV yielded on average 1.32% more per year over the past decade (3.99% vs. 2.67%). The expense ratio of EFV is 0.34 percentage points higher than GOVT’s (0.39% vs. 0.05%).

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Fund Composition

Holdings

EFV - Holdings

EFV HoldingsWeight
Novartis AG2.41%
Toyota Motor Corp2.21%
Commonwealth Bank of Australia1.59%
Siemens AG1.45%
Sanofi SA1.42%
HSBC Holdings PLC1.4%
TotalEnergies SE1.35%
Allianz SE1.23%
GlaxoSmithKline PLC1.18%
Rio Tinto PLC1.1%

EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.

HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.

GOVT - Holdings

GOVT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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Risk Analysis

EFVGOVT
Mean Return0.420
R-squared92.150
Std. Deviation16.530
Alpha-1.770
Beta1.050
Sharpe Ratio0.260
Treynor Ratio2.920

The iShares MSCI EAFE Value ETF (EFV) has a Mean Return of 0.42 with a Alpha of -1.77 and a Treynor Ratio of 2.92. Its Sharpe Ratio is 0.26 while EFV’s Beta is 1.05. Furthermore, the fund has a R-squared of 92.15 and a Standard Deviation of 16.53.

The iShares U.S. Treasury Bond ETF (GOVT) has a Alpha of 0 with a Sharpe Ratio of 0 and a Mean Return of 0. Its Beta is 0 while GOVT’s R-squared is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.

EFV’s Mean Return is 0.42 points higher than that of GOVT and its R-squared is 92.15 points higher. With a Standard Deviation of 16.53, EFV is slightly more volatile than GOVT. The Alpha and Beta of EFV are 1.77 points lower and 1.05 points higher than GOVT’s Alpha and Beta.

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Performance

Annual Returns

EFV vs. GOVT - Annual Returns

YearEFVGOVT
2020-2.78%7.92%
201915.97%6.71%
2018-14.88%0.74%
201721.22%2.19%
20164.87%0.92%
2015-5.89%0.76%
2014-5.65%4.99%
201322.61%-2.84%
201217.52%0.0%
2011-12.24%0.0%
20103.18%0.0%

EFV had its best year in 2013 with an annual return of 22.61%. EFV’s worst year over the past decade yielded -14.88% and occurred in 2018. In most years the iShares MSCI EAFE Value ETF provided moderate returns such as in 2020, 2010, and 2016 where annual returns amounted to -2.78%, 3.18%, and 4.87% respectively.

The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

EFV vs. GOVT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EFV$10,000$13,2813.99%
GOVT$10,000$12,2972.67%

A $10,000 investment in EFV would have resulted in a final balance of $13,281. This is a profit of $3,281 over 8 years and amounts to a compound annual growth rate (CAGR) of 3.99%.

With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.

EFV’s CAGR is 1.32 percentage points higher than that of GOVT and as a result, would have yielded $984 more on a $10,000 investment. Thus, EFV outperformed GOVT by 1.32% annually.


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