The iShares Core MSCI EAFE ETF (IEFA) and the Vanguard Value Index Fund ETF Shares (VTV) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and VTV is a Vanguard Large Value fund. So, what’s the difference between IEFA and VTV? And which fund is better?
The expense ratio of IEFA is 0.03 percentage points higher than VTV’s (0.07% vs. 0.04%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than VTV over the past ten years.
In this article, we’ll compare IEFA vs. VTV. We’ll look at industry exposure and risk metrics, as well as at their annual returns and performance. Moreover, I’ll also discuss IEFA’s and VTV’s portfolio growth, fund composition, and holdings and examine how these affect their overall returns.
|Name||iShares Core MSCI EAFE ETF||Vanguard Value Index Fund ETF Shares|
|Category||Foreign Large Blend||Large Value|
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 Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
IEFA’s dividend yield is 0.13% higher than that of VTV (2.28% vs. 2.15%). Also, IEFA yielded on average 6.29% less per year over the past decade (5.79% vs. 12.07%). The expense ratio of IEFA is 0.03 percentage points higher than VTV’s (0.07% vs. 0.04%).
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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 Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.
VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.
IEFA is 3.71% more exposed to the Industrials sector than VTV (16.32% vs 12.61%). IEFA’s exposure to Financial Services and Healthcare stocks is 6.90% lower and 7.83% lower respectively (15.91% vs. 22.81% and 12.01% vs. 19.84%). In total, Utilities, Real Estate, and Communication Services also make up 0.78% less of the fund’s holdings compared to VTV (13.09% vs. 13.87%).
|ASML Holding NV||1.43%|
|Roche Holding AG||1.31%|
|LVMH Moet Hennessy Louis Vuitton SE||1.08%|
|Toyota Motor Corp||0.92%|
|AIA Group Ltd||0.74%|
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%.
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
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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 VTV, returning 33.03% on an annual basis. The poorest year for VTV in the last ten years was 2018, with a yield of -5.39%. Most years the Vanguard Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.19%, 14.45%, and 15.19% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VTV, the end total would have been $18,692. This equates to a $8,692 profit over 7 years and a compound annual growth rate (CAGR) of 12.07%.
IEFA’s CAGR is 6.29 percentage points lower than that of VTV and as a result, would have yielded $4,684 less on a $10,000 investment. Thus, IEFA performed worse than VTV by 6.29% annually.
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