EFV vs. TLT: What’s The Difference?

The iShares MSCI EAFE Value ETF (EFV) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. EFV is a iShares Foreign Large Value fund and TLT is a iShares Long Government fund. So, what’s the difference between EFV and TLT? And which fund is better?

The expense ratio of EFV is 0.24 percentage points higher than TLT’s (0.39% vs. 0.15%). EFV also has a high exposure to the financial services sector while TLT is mostly comprised of AAA bonds. Overall, EFV has provided lower returns than TLT over the past 11 years.

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

Summary

EFV TLT
Name iShares MSCI EAFE Value ETF iShares 20+ Year Treasury Bond ETF
Category Foreign Large Value Long Government
Issuer iShares iShares
AUM 14.37B 15.15B
Avg. Return 3.99% 9.00%
Div. Yield 2.94% 1.5%
Expense Ratio 0.39% 0.15%

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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

EFV’s dividend yield is 1.44% higher than that of TLT (2.94% vs. 1.5%). Also, EFV yielded on average 5.00% less per year over the past decade (3.99% vs. 9.00%). The expense ratio of EFV is 0.24 percentage points higher than TLT’s (0.39% vs. 0.15%).

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Fund Composition

Holdings

EFV - Holdings

EFV Holdings Weight
Novartis AG 2.41%
Toyota Motor Corp 2.21%
Commonwealth Bank of Australia 1.59%
Siemens AG 1.45%
Sanofi SA 1.42%
HSBC Holdings PLC 1.4%
TotalEnergies SE 1.35%
Allianz SE 1.23%
GlaxoSmithKline PLC 1.18%
Rio Tinto PLC 1.1%

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%.

TLT - Holdings

TLT Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

TLT’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

EFV TLT
Mean Return 0.42 0.63
R-squared 92.15 68.76
Std. Deviation 16.53 12.76
Alpha -1.77 -2.83
Beta 1.05 3.54
Sharpe Ratio 0.26 0.55
Treynor Ratio 2.92 1.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a Alpha of -2.83 with a R-squared of 68.76 and a Treynor Ratio of 1.82. Its Mean Return is 0.63 while TLT’s Standard Deviation is 12.76. Furthermore, the fund has a Sharpe Ratio of 0.55 and a Beta of 3.54.

EFV’s Mean Return is 0.21 points lower than that of TLT and its R-squared is 23.39 points higher. With a Standard Deviation of 16.53, EFV is slightly more volatile than TLT. The Alpha and Beta of EFV are 1.06 points higher and 2.49 points lower than TLT’s Alpha and Beta.

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Performance

Annual Returns

EFV vs. TLT - Annual Returns

Year EFV TLT
2020 -2.78% 17.92%
2019 15.97% 14.93%
2018 -14.88% -2.07%
2017 21.22% 8.92%
2016 4.87% 1.36%
2015 -5.89% -1.65%
2014 -5.65% 27.35%
2013 22.61% -13.91%
2012 17.52% 3.25%
2011 -12.24% 33.6%
2010 3.18% 9.25%

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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

EFV vs. TLT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EFV $10,000 $14,134 3.99%
TLT $10,000 $23,809 9.00%

A $10,000 investment in EFV would have resulted in a final balance of $14,134. This is a profit of $4,134 over 11 years and amounts to a compound annual growth rate (CAGR) of 3.99%.

With a $10,000 investment in TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

EFV’s CAGR is 5.00 percentage points lower than that of TLT and as a result, would have yielded $9,675 less on a $10,000 investment. Thus, EFV performed worse than TLT by 5.00% annually.


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