IEFA vs. VBK: What’s The Difference?

The iShares Core MSCI EAFE ETF (IEFA) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between IEFA and VBK? And which fund is better?

IEFA and VBK have the same expense ratio: 0.07%. IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than VBK over the past ten years.

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

Summary

IEFA VBK
Name iShares Core MSCI EAFE ETF Vanguard Small-Cap Growth Index Fund ETF Shares
Category Foreign Large Blend Small Growth
Issuer iShares Vanguard
AUM 95.78B 37.89B
Avg. Return 5.79% 16.53%
Div. Yield 2.28% 0.45%
Expense Ratio 0.07% 0.07%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

IEFA’s dividend yield is 1.83% higher than that of VBK (2.28% vs. 0.45%). Also, IEFA yielded on average 10.74% less per year over the past decade (5.79% vs. 16.53%). IEFA and VBK have the same expense ratio: 0.07%.

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Fund Composition

Industry Exposure

IEFA vs. VBK - Industry Exposure

IEFA VBK
Technology 9.81% 27.87%
Industrials 16.32% 13.19%
Energy 3.19% 1.77%
Communication Services 5.53% 3.24%
Utilities 3.25% 0.32%
Healthcare 12.01% 23.24%
Consumer Defensive 9.78% 3.83%
Real Estate 4.31% 7.87%
Financial Services 15.91% 4.05%
Consumer Cyclical 11.96% 12.13%
Basic Materials 7.93% 2.49%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

IEFA is 3.13% more exposed to the Industrials sector than VBK (16.32% vs 13.19%). IEFA’s exposure to Financial Services and Healthcare stocks is 11.86% higher and 11.23% lower respectively (15.91% vs. 4.05% and 12.01% vs. 23.24%). In total, Utilities, Real Estate, and Communication Services also make up 1.66% more of the fund’s holdings compared to VBK (13.09% vs. 11.43%).

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%.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Performance

Annual Returns

IEFA vs. VBK - Annual Returns

Year IEFA VBK
2020 8.55% 35.29%
2019 22.67% 32.75%
2018 -14.2% -5.68%
2017 26.42% 21.9%
2016 1.36% 10.74%
2015 0.53% -2.51%
2014 -4.82% 4.02%
2013 23.73% 38.18%
2012 0.0% 17.67%
2011 0.0% -1.43%
2010 0.0% 30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

IEFA vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
VBK $10,000 $23,189 16.53%

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 VBK, the end total would have been $23,189. This equates to a $13,189 profit over 7 years and a compound annual growth rate (CAGR) of 16.53%.

IEFA’s CAGR is 10.74 percentage points lower than that of VBK and as a result, would have yielded $9,181 less on a $10,000 investment. Thus, IEFA performed worse than VBK by 10.74% annually.


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