IEFA vs. VLUE: What’s The Difference?

The iShares Core MSCI EAFE ETF (IEFA) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and VLUE is a iShares Large Value fund. So, what’s the difference between IEFA and VLUE? And which fund is better?

The expense ratio of IEFA is 0.08 percentage points lower than VLUE’s (0.07% vs. 0.15%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than VLUE over the past ten years.

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

Summary

IEFA VLUE
Name iShares Core MSCI EAFE ETF iShares MSCI USA Value Factor ETF
Category Foreign Large Blend Large Value
Issuer iShares iShares
AUM 95.78B 15.95B
Avg. Return 5.79% 8.91%
Div. Yield 2.28% 1.89%
Expense Ratio 0.07% 0.15%

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 MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

IEFA’s dividend yield is 0.39% higher than that of VLUE (2.28% vs. 1.89%). Also, IEFA yielded on average 3.12% less per year over the past decade (5.79% vs. 8.91%). The expense ratio of IEFA is 0.08 percentage points lower than VLUE’s (0.07% vs. 0.15%).

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Fund Composition

Industry Exposure

IEFA vs. VLUE - Industry Exposure

IEFA VLUE
Technology 9.81% 26.89%
Industrials 16.32% 9.14%
Energy 3.19% 2.42%
Communication Services 5.53% 10.39%
Utilities 3.25% 2.68%
Healthcare 12.01% 14.31%
Consumer Defensive 9.78% 7.22%
Real Estate 4.31% 3.19%
Financial Services 15.91% 10.96%
Consumer Cyclical 11.96% 10.66%
Basic Materials 7.93% 2.14%

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 MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

IEFA is 7.18% more exposed to the Industrials sector than VLUE (16.32% vs 9.14%). IEFA’s exposure to Financial Services and Healthcare stocks is 4.95% higher and 2.30% lower respectively (15.91% vs. 10.96% and 12.01% vs. 14.31%). In total, Utilities, Real Estate, and Communication Services also make up 3.17% less of the fund’s holdings compared to VLUE (13.09% vs. 16.26%).

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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Performance

Annual Returns

IEFA vs. VLUE - Annual Returns

Year IEFA VLUE
2020 8.55% -0.32%
2019 22.67% 27.47%
2018 -14.2% -11.18%
2017 26.42% 21.97%
2016 1.36% 15.68%
2015 0.53% -3.54%
2014 -4.82% 12.29%
2013 23.73% 0.0%
2012 0.0% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

IEFA vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
VLUE $10,000 $17,247 8.91%

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 VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

IEFA’s CAGR is 3.12 percentage points lower than that of VLUE and as a result, would have yielded $3,239 less on a $10,000 investment. Thus, IEFA performed worse than VLUE by 3.12% annually.


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