The iShares Core MSCI EAFE ETF (IEFA) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between IEFA and IWS? And which fund is better?
The expense ratio of IEFA is 0.16 percentage points lower than IWS’s (0.07% vs. 0.23%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than IWS over the past ten years.
In this article, we’ll compare IEFA vs. IWS. We’ll look at industry exposure and risk metrics, as well as at their portfolio growth and performance. Moreover, I’ll also discuss IEFA’s and IWS’s annual returns, fund composition, and holdings and examine how these affect their overall returns.
Summary
| IEFA | IWS | |
| Name | iShares Core MSCI EAFE ETF | iShares Russell Mid-Cap Value ETF |
| Category | Foreign Large Blend | Mid-Cap Value |
| Issuer | iShares | iShares |
| AUM | 95.78B | 14.24B |
| Avg. Return | 5.79% | 12.35% |
| Div. Yield | 2.28% | 1.34% |
| Expense Ratio | 0.07% | 0.23% |
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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
IEFA’s dividend yield is 0.94% higher than that of IWS (2.28% vs. 1.34%). Also, IEFA yielded on average 6.56% less per year over the past decade (5.79% vs. 12.35%). The expense ratio of IEFA is 0.16 percentage points lower than IWS’s (0.07% vs. 0.23%).
Fund Composition
Industry Exposure
| IEFA | IWS | |
| Technology | 9.81% | 11.39% |
| Industrials | 16.32% | 14.6% |
| Energy | 3.19% | 4.71% |
| Communication Services | 5.53% | 4.08% |
| Utilities | 3.25% | 6.97% |
| Healthcare | 12.01% | 8.56% |
| Consumer Defensive | 9.78% | 4.76% |
| Real Estate | 4.31% | 11.71% |
| Financial Services | 15.91% | 15.75% |
| Consumer Cyclical | 11.96% | 12.07% |
| Basic Materials | 7.93% | 5.4% |
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 Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.
IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.
IEFA is 1.72% more exposed to the Industrials sector than IWS (16.32% vs 14.6%). IEFA’s exposure to Financial Services and Healthcare stocks is 0.16% higher and 3.45% higher respectively (15.91% vs. 15.75% and 12.01% vs. 8.56%). In total, Utilities, Real Estate, and Communication Services also make up 9.67% less of the fund’s holdings compared to IWS (13.09% vs. 22.76%).
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%.
| IWS Holdings | Weight |
| Twitter Inc | 0.69% |
| Marvell Technology Inc | 0.69% |
| IHS Markit Ltd | 0.62% |
| Prudential Financial Inc | 0.56% |
| Otis Worldwide Corp Ordinary Shares | 0.54% |
| International Flavors & Fragrances Inc | 0.53% |
| Xcel Energy Inc | 0.52% |
| Motorola Solutions Inc | 0.52% |
| Aptiv PLC | 0.52% |
| Aflac Inc | 0.52% |
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
Performance
Annual Returns
| Year | IEFA | IWS |
| 2020 | 8.55% | 4.76% |
| 2019 | 22.67% | 26.78% |
| 2018 | -14.2% | -12.36% |
| 2017 | 26.42% | 13.1% |
| 2016 | 1.36% | 19.69% |
| 2015 | 0.53% | -4.93% |
| 2014 | -4.82% | 14.49% |
| 2013 | 23.73% | 33.11% |
| 2012 | 0.0% | 18.27% |
| 2011 | 0.0% | -1.55% |
| 2010 | 0.0% | 24.46% |
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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEFA | $10,000 | $14,008 | 5.79% |
| IWS | $10,000 | $17,150 | 12.35% |
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 IWS, the end total would have been $17,150. This equates to a $7,150 profit over 7 years and a compound annual growth rate (CAGR) of 12.35%.
IEFA’s CAGR is 6.56 percentage points lower than that of IWS and as a result, would have yielded $3,142 less on a $10,000 investment. Thus, IEFA performed worse than IWS by 6.56% annually.
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