The iShares Core MSCI EAFE ETF (IEFA) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between IEFA and VOE? And which fund is better?
IEFA and VOE 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 VOE over the past ten years.
In this article, we’ll compare IEFA vs. VOE. We’ll look at industry exposure and portfolio growth, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss IEFA’s and VOE’s annual returns, performance, and holdings and examine how these affect their overall returns.
Summary
| IEFA | VOE | |
| Name | iShares Core MSCI EAFE ETF | Vanguard Mid-Cap Value Index Fund ETF Shares |
| Category | Foreign Large Blend | Mid-Cap Value |
| Issuer | iShares | Vanguard |
| AUM | 95.78B | 26.78B |
| Avg. Return | 5.79% | 12.52% |
| Div. Yield | 2.28% | 1.87% |
| 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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.
IEFA’s dividend yield is 0.41% higher than that of VOE (2.28% vs. 1.87%). Also, IEFA yielded on average 6.74% less per year over the past decade (5.79% vs. 12.52%). IEFA and VOE have the same expense ratio: 0.07%.
Fund Composition
Industry Exposure
| IEFA | VOE | |
| Technology | 9.81% | 9.85% |
| Industrials | 16.32% | 9.4% |
| Energy | 3.19% | 5.69% |
| Communication Services | 5.53% | 5.27% |
| Utilities | 3.25% | 10.93% |
| Healthcare | 12.01% | 7.04% |
| Consumer Defensive | 9.78% | 4.85% |
| Real Estate | 4.31% | 11.48% |
| Financial Services | 15.91% | 18.26% |
| Consumer Cyclical | 11.96% | 11.8% |
| Basic Materials | 7.93% | 5.44% |
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 Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.
VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.
IEFA is 6.92% more exposed to the Industrials sector than VOE (16.32% vs 9.4%). IEFA’s exposure to Financial Services and Healthcare stocks is 2.35% lower and 4.97% higher respectively (15.91% vs. 18.26% and 12.01% vs. 7.04%). In total, Utilities, Real Estate, and Communication Services also make up 14.59% less of the fund’s holdings compared to VOE (13.09% vs. 27.68%).
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%.
| VOE Holdings | Weight |
| Carrier Global Corp Ordinary Shares | 1.28% |
| International Flavors & Fragrances Inc | 1.13% |
| Motorola Solutions Inc | 1.12% |
| Discover Financial Services | 1.09% |
| Welltower Inc | 1.05% |
| Corteva Inc | 0.99% |
| Valero Energy Corp | 0.97% |
| Corning Inc | 0.95% |
| Willis Towers Watson PLC | 0.9% |
| D.R. Horton Inc | 0.89% |
VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.
Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.
Performance
Annual Returns
| Year | IEFA | VOE |
| 2020 | 8.55% | 2.5% |
| 2019 | 22.67% | 27.98% |
| 2018 | -14.2% | -12.41% |
| 2017 | 26.42% | 17.05% |
| 2016 | 1.36% | 15.26% |
| 2015 | 0.53% | -1.8% |
| 2014 | -4.82% | 13.98% |
| 2013 | 23.73% | 37.65% |
| 2012 | 0.0% | 16.04% |
| 2011 | 0.0% | -0.32% |
| 2010 | 0.0% | 21.83% |
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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEFA | $10,000 | $14,008 | 5.79% |
| VOE | $10,000 | $17,350 | 12.52% |
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 VOE, the end total would have been $17,350. This equates to a $7,350 profit over 7 years and a compound annual growth rate (CAGR) of 12.52%.
IEFA’s CAGR is 6.74 percentage points lower than that of VOE and as a result, would have yielded $3,342 less on a $10,000 investment. Thus, IEFA performed worse than VOE by 6.74% annually.
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