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.
|Name||iShares MSCI EAFE Value ETF||iShares 20+ Year Treasury Bond ETF|
|Category||Foreign Large Value||Long Government|
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%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|Toyota Motor Corp||2.21%|
|Commonwealth Bank of Australia||1.59%|
|HSBC Holdings PLC||1.4%|
|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 Bond Sectors||Weight|
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.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.