The iShares Core MSCI EAFE ETF (IEFA) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between IEFA and IEF? And which fund is better?
The expense ratio of IEFA is 0.08 percentage points lower than IEF’s (0.07% vs. 0.15%). IEFA also has a high exposure to the industrials sector while IEF is mostly comprised of AAA bonds. Overall, IEFA has provided higher returns than IEF over the past ten years.
In this article, we’ll compare IEFA vs. IEF. We’ll look at holdings and fund composition, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss IEFA’s and IEF’s annual returns, performance, and industry exposure and examine how these affect their overall returns.
Summary
| IEFA | IEF | |
| Name | iShares Core MSCI EAFE ETF | iShares 7-10 Year Treasury Bond ETF |
| Category | Foreign Large Blend | Long Government |
| Issuer | iShares | iShares |
| AUM | 95.78B | 13.44B |
| Avg. Return | 5.79% | 5.06% |
| Div. Yield | 2.28% | 0.84% |
| Expense Ratio | 0.07% | 0.15% |
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 iShares 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.
IEFA’s dividend yield is 1.44% higher than that of IEF (2.28% vs. 0.84%). Also, IEFA yielded on average 0.73% more per year over the past decade (5.79% vs. 5.06%). The expense ratio of IEFA is 0.08 percentage points lower than IEF’s (0.07% vs. 0.15%).
Fund Composition
Holdings
| IEFA Holdings | Weight |
| Nestle SA | 1.77% |
| ASML Holding NV | 1.43% |
| Roche Holding AG | 1.31% |
| LVMH Moet Hennessy Louis Vuitton SE | 1.08% |
| Novartis AG | 1.0% |
| Toyota Motor Corp | 0.92% |
| AstraZeneca PLC | 0.78% |
| Unilever PLC | 0.76% |
| AIA Group Ltd | 0.74% |
| SAP SE | 0.73% |
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%.
| IEF 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% |
IEF’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.
Performance
Annual Returns
| Year | IEFA | IEF |
| 2020 | 8.55% | 9.84% |
| 2019 | 22.67% | 8.38% |
| 2018 | -14.2% | 0.82% |
| 2017 | 26.42% | 2.47% |
| 2016 | 1.36% | 1.0% |
| 2015 | 0.53% | 1.55% |
| 2014 | -4.82% | 8.92% |
| 2013 | 23.73% | -6.12% |
| 2012 | 0.0% | 4.06% |
| 2011 | 0.0% | 15.46% |
| 2010 | 0.0% | 9.29% |
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 IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEFA | $10,000 | $14,008 | 5.79% |
| IEF | $10,000 | $13,739 | 5.06% |
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 IEF, the end total would have been $13,739. This equates to a $3,739 profit over 7 years and a compound annual growth rate (CAGR) of 5.06%.
IEFA’s CAGR is 0.73 percentage points higher than that of IEF and as a result, would have yielded $269 more on a $10,000 investment. Thus, IEFA outperformed IEF by 0.73% annually.
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