The iShares Core MSCI EAFE ETF (IEFA) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between IEFA and IUSB? And which fund is better?
The expense ratio of IEFA is 0.01 percentage points higher than IUSB’s (0.07% vs. 0.06%). IEFA also has a high exposure to the industrials sector while IUSB is mostly comprised of AAA bonds. Overall, IEFA has provided higher returns than IUSB over the past ten years.
In this article, we’ll compare IEFA vs. IUSB. We’ll look at annual returns and performance, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss IEFA’s and IUSB’s risk metrics, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Core MSCI EAFE ETF||iShares Core Total USD Bond Market ETF|
|Category||Foreign Large Blend||N/A|
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 Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
IEFA’s dividend yield is 0.18% higher than that of IUSB (2.28% vs. 2.1%). Also, IEFA yielded on average 1.66% more per year over the past decade (5.79% vs. 4.13%). The expense ratio of IEFA is 0.01 percentage points higher than IUSB’s (0.07% vs. 0.06%).
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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%.
|IUSB Bond Sectors||Weight|
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) 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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IEFA would have resulted in a final balance of $14,717. This is a profit of $4,717 over 6 years and amounts to a compound annual growth rate (CAGR) of 5.79%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
IEFA’s CAGR is 1.66 percentage points higher than that of IUSB and as a result, would have yielded $2,013 more on a $10,000 investment. Thus, IEFA outperformed IUSB by 1.66% annually.
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