IEFA vs. IVW: What’s The Difference?

The iShares Core MSCI EAFE ETF (IEFA) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and IVW is a iShares Large Growth fund. So, what’s the difference between IEFA and IVW? And which fund is better?

The expense ratio of IEFA is 0.11 percentage points lower than IVW’s (0.07% vs. 0.18%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than IVW over the past ten years.

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

Summary

IEFA IVW
Name iShares Core MSCI EAFE ETF iShares S&P 500 Growth ETF
Category Foreign Large Blend Large Growth
Issuer iShares iShares
AUM 95.78B 35.72B
Avg. Return 5.79% 16.74%
Div. Yield 2.28% 0.61%
Expense Ratio 0.07% 0.18%

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 S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

IEFA’s dividend yield is 1.67% higher than that of IVW (2.28% vs. 0.61%). Also, IEFA yielded on average 10.95% less per year over the past decade (5.79% vs. 16.74%). The expense ratio of IEFA is 0.11 percentage points lower than IVW’s (0.07% vs. 0.18%).

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Fund Composition

Industry Exposure

IEFA vs. IVW - Industry Exposure

IEFA IVW
Technology 9.81% 37.8%
Industrials 16.32% 5.72%
Energy 3.19% 0.06%
Communication Services 5.53% 15.44%
Utilities 3.25% 0.47%
Healthcare 12.01% 11.88%
Consumer Defensive 9.78% 3.84%
Real Estate 4.31% 1.11%
Financial Services 15.91% 6.78%
Consumer Cyclical 11.96% 15.25%
Basic Materials 7.93% 1.65%

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 S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

IEFA is 10.60% more exposed to the Industrials sector than IVW (16.32% vs 5.72%). IEFA’s exposure to Financial Services and Healthcare stocks is 9.13% higher and 0.13% higher respectively (15.91% vs. 6.78% and 12.01% vs. 11.88%). In total, Utilities, Real Estate, and Communication Services also make up 3.93% less of the fund’s holdings compared to IVW (13.09% vs. 17.02%).

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%.

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

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Performance

Annual Returns

IEFA vs. IVW - Annual Returns

Year IEFA IVW
2020 8.55% 33.21%
2019 22.67% 30.91%
2018 -14.2% -0.17%
2017 26.42% 27.2%
2016 1.36% 6.74%
2015 0.53% 5.33%
2014 -4.82% 14.67%
2013 23.73% 32.48%
2012 0.0% 14.39%
2011 0.0% 4.49%
2010 0.0% 14.84%

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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.

Portfolio Growth

IEFA vs. IVW - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
IVW $10,000 $28,548 16.74%

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 IVW, the end total would have been $28,548. This equates to a $18,548 profit over 7 years and a compound annual growth rate (CAGR) of 16.74%.

IEFA’s CAGR is 10.95 percentage points lower than that of IVW and as a result, would have yielded $14,540 less on a $10,000 investment. Thus, IEFA performed worse than IVW by 10.95% annually.


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