The iShares Core MSCI EAFE ETF (IEFA) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between IEFA and IWN? And which fund is better?
The expense ratio of IEFA is 0.17 percentage points lower than IWN’s (0.07% vs. 0.24%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than IWN over the past ten years.
In this article, we’ll compare IEFA vs. IWN. We’ll look at industry exposure and performance, as well as at their fund composition and annual returns. Moreover, I’ll also discuss IEFA’s and IWN’s portfolio growth, risk metrics, and holdings and examine how these affect their overall returns.
Summary
| IEFA | IWN | |
| Name | iShares Core MSCI EAFE ETF | iShares Russell 2000 Value ETF |
| Category | Foreign Large Blend | Small Value |
| Issuer | iShares | iShares |
| AUM | 95.78B | 15.48B |
| Avg. Return | 5.79% | 10.96% |
| Div. Yield | 2.28% | 1.26% |
| Expense Ratio | 0.07% | 0.24% |
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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
IEFA’s dividend yield is 1.02% higher than that of IWN (2.28% vs. 1.26%). Also, IEFA yielded on average 5.17% less per year over the past decade (5.79% vs. 10.96%). The expense ratio of IEFA is 0.17 percentage points lower than IWN’s (0.07% vs. 0.24%).
Fund Composition
Industry Exposure
| IEFA | IWN | |
| Technology | 9.81% | 6.02% |
| Industrials | 16.32% | 14.58% |
| Energy | 3.19% | 5.84% |
| Communication Services | 5.53% | 4.17% |
| Utilities | 3.25% | 4.69% |
| Healthcare | 12.01% | 10.94% |
| Consumer Defensive | 9.78% | 3.77% |
| Real Estate | 4.31% | 14.36% |
| Financial Services | 15.91% | 22.97% |
| Consumer Cyclical | 11.96% | 8.39% |
| Basic Materials | 7.93% | 4.29% |
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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.
IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.
IEFA is 1.74% more exposed to the Industrials sector than IWN (16.32% vs 14.58%). IEFA’s exposure to Financial Services and Healthcare stocks is 7.06% lower and 1.07% higher respectively (15.91% vs. 22.97% and 12.01% vs. 10.94%). In total, Utilities, Real Estate, and Communication Services also make up 10.13% less of the fund’s holdings compared to IWN (13.09% vs. 23.22%).
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%.
| IWN Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 1.06% |
| Tenet Healthcare Corp | 0.47% |
| Stag Industrial Inc | 0.47% |
| Ovintiv Inc | 0.45% |
| EMCOR Group Inc | 0.42% |
| Valley National Bancorp | 0.37% |
| Chesapeake Energy Corp Ordinary Shares – New | 0.37% |
| Agree Realty Corp | 0.36% |
| Macy’s Inc | 0.35% |
| Essent Group Ltd | 0.35% |
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
Performance
Annual Returns
| Year | IEFA | IWN |
| 2020 | 8.55% | 4.5% |
| 2019 | 22.67% | 22.17% |
| 2018 | -14.2% | -12.94% |
| 2017 | 26.42% | 7.73% |
| 2016 | 1.36% | 31.64% |
| 2015 | 0.53% | -7.53% |
| 2014 | -4.82% | 4.13% |
| 2013 | 23.73% | 34.3% |
| 2012 | 0.0% | 17.92% |
| 2011 | 0.0% | -5.64% |
| 2010 | 0.0% | 24.29% |
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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEFA | $10,000 | $14,008 | 5.79% |
| IWN | $10,000 | $15,177 | 10.96% |
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 IWN, the end total would have been $15,177. This equates to a $5,177 profit over 7 years and a compound annual growth rate (CAGR) of 10.96%.
IEFA’s CAGR is 5.17 percentage points lower than that of IWN and as a result, would have yielded $1,169 less on a $10,000 investment. Thus, IEFA performed worse than IWN by 5.17% annually.
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