IEFA vs. SDY: What’s The Difference?

The iShares Core MSCI EAFE ETF (IEFA) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between IEFA and SDY? And which fund is better?

The expense ratio of IEFA is 0.28 percentage points lower than SDY’s (0.07% vs. 0.35%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than SDY over the past ten years.

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

Summary

IEFA SDY
Name iShares Core MSCI EAFE ETF SPDR S&P Dividend ETF
Category Foreign Large Blend Large Value
Issuer iShares SPDR State Street Global Advisors
AUM 95.78B 19.67B
Avg. Return 5.79% 12.44%
Div. Yield 2.28% 2.65%
Expense Ratio 0.07% 0.35%

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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

IEFA’s dividend yield is 0.37% lower than that of SDY (2.28% vs. 2.65%). Also, IEFA yielded on average 6.65% less per year over the past decade (5.79% vs. 12.44%). The expense ratio of IEFA is 0.28 percentage points lower than SDY’s (0.07% vs. 0.35%).

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Fund Composition

Industry Exposure

IEFA vs. SDY - Industry Exposure

IEFA SDY
Technology 9.81% 2.0%
Industrials 16.32% 15.89%
Energy 3.19% 5.95%
Communication Services 5.53% 4.64%
Utilities 3.25% 12.14%
Healthcare 12.01% 7.35%
Consumer Defensive 9.78% 14.01%
Real Estate 4.31% 6.57%
Financial Services 15.91% 16.32%
Consumer Cyclical 11.96% 8.68%
Basic Materials 7.93% 6.45%

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 SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

IEFA is 0.43% more exposed to the Industrials sector than SDY (16.32% vs 15.89%). IEFA’s exposure to Financial Services and Healthcare stocks is 0.41% lower and 4.66% higher respectively (15.91% vs. 16.32% and 12.01% vs. 7.35%). In total, Utilities, Real Estate, and Communication Services also make up 10.26% less of the fund’s holdings compared to SDY (13.09% vs. 23.35%).

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%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

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Performance

Annual Returns

IEFA vs. SDY - Annual Returns

Year IEFA SDY
2020 8.55% 1.78%
2019 22.67% 23.37%
2018 -14.2% -2.73%
2017 26.42% 15.84%
2016 1.36% 20.17%
2015 0.53% -0.7%
2014 -4.82% 13.8%
2013 23.73% 30.09%
2012 0.0% 11.51%
2011 0.0% 7.28%
2010 0.0% 16.41%

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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

IEFA vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
SDY $10,000 $19,213 12.44%

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 SDY, the end total would have been $19,213. This equates to a $9,213 profit over 7 years and a compound annual growth rate (CAGR) of 12.44%.

IEFA’s CAGR is 6.65 percentage points lower than that of SDY and as a result, would have yielded $5,205 less on a $10,000 investment. Thus, IEFA performed worse than SDY by 6.65% annually.


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