IEFA vs. VXF: What’s The Difference?

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

The expense ratio of IEFA is 0.01 percentage points higher than VXF’s (0.07% vs. 0.06%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than VXF over the past ten years.

In this article, we’ll compare IEFA vs. VXF. 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 VXF’s industry exposure, annual returns, and fund composition and examine how these affect their overall returns.

Summary

IEFA VXF
Name iShares Core MSCI EAFE ETF Vanguard Extended Market Index Fund ETF Shares
Category Foreign Large Blend Mid-Cap Growth
Issuer iShares Vanguard
AUM 95.78B 114.53B
Avg. Return 5.79% 15.47%
Div. Yield 2.28% 1.19%
Expense Ratio 0.07% 0.06%

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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

IEFA’s dividend yield is 1.09% higher than that of VXF (2.28% vs. 1.19%). Also, IEFA yielded on average 9.69% less per year over the past decade (5.79% vs. 15.47%). The expense ratio of IEFA is 0.01 percentage points higher than VXF’s (0.07% vs. 0.06%).

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Fund Composition

Industry Exposure

IEFA vs. VXF - Industry Exposure

IEFA VXF
Technology 9.81% 23.61%
Industrials 16.32% 11.31%
Energy 3.19% 2.46%
Communication Services 5.53% 7.29%
Utilities 3.25% 1.65%
Healthcare 12.01% 15.25%
Consumer Defensive 9.78% 3.09%
Real Estate 4.31% 8.16%
Financial Services 15.91% 12.56%
Consumer Cyclical 11.96% 11.35%
Basic Materials 7.93% 3.26%

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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.

VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.

IEFA is 5.01% more exposed to the Industrials sector than VXF (16.32% vs 11.31%). IEFA’s exposure to Financial Services and Healthcare stocks is 3.35% higher and 3.24% lower respectively (15.91% vs. 12.56% and 12.01% vs. 15.25%). In total, Utilities, Real Estate, and Communication Services also make up 4.01% less of the fund’s holdings compared to VXF (13.09% vs. 17.10%).

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%.

VXF - Holdings

VXF Holdings Weight
Square Inc A 1.2%
Zoom Video Communications Inc 1.04%
Uber Technologies Inc 0.93%
Moderna Inc 0.9%
Blackstone Group Inc 0.83%
Snap Inc Class A 0.8%
Twilio Inc A 0.73%
DocuSign Inc 0.68%
CrowdStrike Holdings Inc Class A 0.63%
Marvell Technology Inc 0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

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Performance

Annual Returns

IEFA vs. VXF - Annual Returns

Year IEFA VXF
2020 8.55% 32.19%
2019 22.67% 28.04%
2018 -14.2% -9.37%
2017 26.42% 18.1%
2016 1.36% 16.16%
2015 0.53% -3.26%
2014 -4.82% 7.55%
2013 23.73% 38.37%
2012 0.0% 18.48%
2011 0.0% -3.61%
2010 0.0% 27.55%

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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.

Portfolio Growth

IEFA vs. VXF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
VXF $10,000 $21,894 15.47%

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 VXF, the end total would have been $21,894. This equates to a $11,894 profit over 7 years and a compound annual growth rate (CAGR) of 15.47%.

IEFA’s CAGR is 9.69 percentage points lower than that of VXF and as a result, would have yielded $7,886 less on a $10,000 investment. Thus, IEFA performed worse than VXF by 9.69% annually.


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