IEFA vs. IJR: What’s The Difference?

The iShares Core MSCI EAFE ETF (IEFA) and the iShares Core S&P Small-Cap ETF (IJR) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and IJR is a iShares Small Blend fund. So, what’s the difference between IEFA and IJR? And which fund is better?

The expense ratio of IEFA is 0.01 percentage points higher than IJR’s (0.07% vs. 0.06%). IEFA also has a lower exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than IJR over the past ten years.

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

Summary

IEFA IJR
Name iShares Core MSCI EAFE ETF iShares Core S&P Small-Cap ETF
Category Foreign Large Blend Small Blend
Issuer iShares iShares
AUM 95.78B 68.64B
Avg. Return 5.79% 13.97%
Div. Yield 2.28% 0.96%
Expense Ratio 0.07% 0.06%

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 Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.

IEFA’s dividend yield is 1.32% higher than that of IJR (2.28% vs. 0.96%). Also, IEFA yielded on average 8.18% less per year over the past decade (5.79% vs. 13.97%). The expense ratio of IEFA is 0.01 percentage points higher than IJR’s (0.07% vs. 0.06%).

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Fund Composition

Industry Exposure

IEFA vs. IJR - Industry Exposure

IEFA IJR
Technology 9.81% 14.32%
Industrials 16.32% 17.31%
Energy 3.19% 4.0%
Communication Services 5.53% 2.59%
Utilities 3.25% 1.8%
Healthcare 12.01% 11.55%
Consumer Defensive 9.78% 4.01%
Real Estate 4.31% 9.55%
Financial Services 15.91% 15.91%
Consumer Cyclical 11.96% 13.61%
Basic Materials 7.93% 5.34%

The iShares Core MSCI EAFE ETF (IEFA) has the most exposure to the Industrials sector at 16.32%. This is followed by Financial Services and Healthcare at 15.91% and 12.01% respectively. Utilities (3.25%), Real Estate (4.31%), and Communication Services (5.53%) only make up 13.09% of the fund’s total assets.

IEFA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Technology, Consumer Cyclical, and Healthcare stocks at 7.93%, 9.78%, 9.81%, 11.96%, and 12.01%.

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

IEFA is 0.99% less exposed to the Industrials sector than IJR (16.32% vs 17.31%). IEFA’s exposure to Financial Services and Healthcare stocks is 0.00% lower and 0.46% higher respectively (15.91% vs. 15.91% and 12.01% vs. 11.55%). In total, Utilities, Real Estate, and Communication Services also make up 0.85% less of the fund’s holdings compared to IJR (13.09% vs. 13.94%).

Holdings

IEFA - 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%.

IJR - Holdings

IJR Holdings Weight
BlackRock Cash Funds Treasury SL Agency 1.08%
GameStop Corp Class A 0.86%
Omnicell Inc 0.61%
Stamps.com Inc 0.58%
Saia Inc 0.57%
Power Integrations Inc 0.57%
Exponent Inc 0.54%
NeoGenomics Inc 0.53%
Chart Industries Inc 0.53%
Macy’s Inc 0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

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Performance

Annual Returns

IEFA vs. IJR - Annual Returns

Year IEFA IJR
2020 8.55% 11.24%
2019 22.67% 22.79%
2018 -14.2% -8.43%
2017 26.42% 13.2%
2016 1.36% 26.49%
2015 0.53% -2.0%
2014 -4.82% 5.67%
2013 23.73% 41.36%
2012 0.0% 16.28%
2011 0.0% 0.9%
2010 0.0% 26.14%

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 2013 was the strongest year for IJR, returning 41.36% on an annual basis. The poorest year for IJR in the last ten years was 2018, with a yield of -8.43%. Most years the iShares Core S&P Small-Cap ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 11.24%, 13.2%, and 16.28% respectively.

Portfolio Growth

IEFA vs. IJR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
IJR $10,000 $18,546 13.97%

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 IJR, the end total would have been $18,546. This equates to a $8,546 profit over 7 years and a compound annual growth rate (CAGR) of 13.97%.

IEFA’s CAGR is 8.18 percentage points lower than that of IJR and as a result, would have yielded $4,538 less on a $10,000 investment. Thus, IEFA performed worse than IJR by 8.18% annually.


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