The iShares Core MSCI EAFE ETF (IEFA) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between IEFA and BIV? And which fund is better?
The expense ratio of IEFA is 0.02 percentage points higher than BIV’s (0.07% vs. 0.05%). IEFA also has a high exposure to the industrials sector while BIV is mostly comprised of AAA bonds. Overall, IEFA has provided higher returns than BIV over the past ten years.
In this article, we’ll compare IEFA vs. BIV. We’ll look at fund composition and holdings, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss IEFA’s and BIV’s industry exposure, annual returns, and performance and examine how these affect their overall returns.
|Name||iShares Core MSCI EAFE ETF||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Foreign Large Blend||Intermediate-Term Bond|
The iShares Core MSCI EAFE ETF (IEFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 95.78B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.07%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
IEFA’s dividend yield is 0.22% higher than that of BIV (2.28% vs. 2.06%). Also, IEFA yielded on average 0.47% more per year over the past decade (5.79% vs. 5.31%). The expense ratio of IEFA is 0.02 percentage points higher than BIV’s (0.07% vs. 0.05%).
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|ASML Holding NV||1.43%|
|Roche Holding AG||1.31%|
|LVMH Moet Hennessy Louis Vuitton SE||1.08%|
|Toyota Motor Corp||0.92%|
|AIA Group Ltd||0.74%|
IEFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 1.77%, 1.43%, 1.31%, 1.08%, and 1.0%.
Toyota Motor Corp (0.92%), AstraZeneca PLC (0.78%), and Unilever PLC (0.76%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the IEFA’s holdings at 0.74% and 0.73%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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IEFA had its best year in 2017 with an annual return of 26.42%. IEFA’s worst year over the past decade yielded -14.2% and occurred in 2018. In most years the iShares Core MSCI EAFE ETF provided moderate returns such as in 2010, 2015, and 2016 where annual returns amounted to 0.0%, 0.53%, and 1.36% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IEFA would have resulted in a final balance of $14,008. This is a profit of $4,008 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.79%.
With a $10,000 investment in BIV, the end total would have been $13,968. This equates to a $3,968 profit over 7 years and a compound annual growth rate (CAGR) of 5.31%.
IEFA’s CAGR is 0.47 percentage points higher than that of BIV and as a result, would have yielded $40 more on a $10,000 investment. Thus, IEFA outperformed BIV by 0.47% annually.
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