The iShares Core S&P Small-Cap ETF (IJR) and the iShares MSCI EAFE ETF (EFA) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and EFA is a iShares Foreign Large Blend fund. So, what’s the difference between IJR and EFA? And which fund is better?
The expense ratio of IJR is 0.26 percentage points lower than EFA’s (0.06% vs. 0.32%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than EFA over the past ten years.
In this article, we’ll compare IJR vs. EFA. We’ll look at portfolio growth and risk metrics, as well as at their industry exposure and holdings. Moreover, I’ll also discuss IJR’s and EFA’s performance, annual returns, and fund composition and examine how these affect their overall returns.
Summary
| IJR | EFA | |
| Name | iShares Core S&P Small-Cap ETF | iShares MSCI EAFE ETF |
| Category | Small Blend | Foreign Large Blend |
| Issuer | iShares | iShares |
| AUM | 68.64B | 56.77B |
| Avg. Return | 13.97% | 6.47% |
| Div. Yield | 0.96% | 2.28% |
| Expense Ratio | 0.06% | 0.32% |
The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
The iShares MSCI EAFE ETF (EFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 56.77B total assets under management and has yielded an average annual return of 6.47% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.32%.
IJR’s dividend yield is 1.32% lower than that of EFA (0.96% vs. 2.28%). Also, IJR yielded on average 7.50% more per year over the past decade (13.97% vs. 6.47%). The expense ratio of IJR is 0.26 percentage points lower than EFA’s (0.06% vs. 0.32%).
Fund Composition
Industry Exposure
| IJR | EFA | |
| Technology | 14.32% | 9.68% |
| Industrials | 17.31% | 15.01% |
| Energy | 4.0% | 3.51% |
| Communication Services | 2.59% | 5.68% |
| Utilities | 1.8% | 3.35% |
| Healthcare | 11.55% | 12.8% |
| Consumer Defensive | 4.01% | 10.56% |
| Real Estate | 9.55% | 3.01% |
| Financial Services | 15.91% | 16.88% |
| Consumer Cyclical | 13.61% | 11.62% |
| Basic Materials | 5.34% | 7.91% |
The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.
IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.
The iShares MSCI EAFE ETF (EFA) has the most exposure to the Financial Services sector at 16.88%. This is followed by Industrials and Healthcare at 15.01% and 12.8% respectively. Utilities (3.35%), Energy (3.51%), and Communication Services (5.68%) only make up 12.54% of the fund’s total assets.
EFA’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.91%, 9.68%, 10.56%, 11.62%, and 12.8%.
IJR is 2.30% more exposed to the Industrials sector than EFA (17.31% vs 15.01%). IJR’s exposure to Financial Services and Technology stocks is 0.97% lower and 4.64% higher respectively (15.91% vs. 16.88% and 14.32% vs. 9.68%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.15% less of the fund’s holdings compared to EFA (10.60% vs. 19.75%).
Holdings
| IJR Holdings | Weight |
| BlackRock Cash Funds Treasury SL Agency | 1.08% |
| GameStop Corp Class A | 0.86% |
| Omnicell Inc | 0.61% |
| Stamps.com Inc | 0.58% |
| Saia Inc | 0.57% |
| Power Integrations Inc | 0.57% |
| Exponent Inc | 0.54% |
| NeoGenomics Inc | 0.53% |
| Chart Industries Inc | 0.53% |
| Macy’s Inc | 0.51% |
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
| EFA Holdings | Weight |
| Nestle SA | 2.11% |
| ASML Holding NV | 1.69% |
| Roche Holding AG | 1.55% |
| LVMH Moet Hennessy Louis Vuitton SE | 1.28% |
| Novartis AG | 1.19% |
| Toyota Motor Corp | 1.09% |
| AstraZeneca PLC | 0.92% |
| Unilever PLC | 0.9% |
| AIA Group Ltd | 0.88% |
| SAP SE | 0.86% |
EFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.11%, 1.69%, 1.55%, 1.28%, and 1.19%.
Toyota Motor Corp (1.09%), AstraZeneca PLC (0.92%), and Unilever PLC (0.9%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the EFA’s holdings at 0.88% and 0.86%.
Risk Analysis
| IJR | EFA | |
| Mean Return | 1.21 | 0.57 |
| R-squared | 76.03 | 96.78 |
| Std. Deviation | 18.68 | 15.01 |
| Alpha | -3.7 | 0.47 |
| Beta | 1.2 | 0.98 |
| Sharpe Ratio | 0.74 | 0.41 |
| Treynor Ratio | 10.77 | 5.33 |
The iShares Core S&P Small-Cap ETF (IJR) has a Treynor Ratio of 10.77 with a Alpha of -3.7 and a Beta of 1.2. Its Standard Deviation is 18.68 while IJR’s Mean Return is 1.21. Furthermore, the fund has a R-squared of 76.03 and a Sharpe Ratio of 0.74.
The iShares MSCI EAFE ETF (EFA) has a Mean Return of 0.57 with a Standard Deviation of 15.01 and a R-squared of 96.78. Its Alpha is 0.47 while EFA’s Treynor Ratio is 5.33. Furthermore, the fund has a Sharpe Ratio of 0.41 and a Beta of 0.98.
IJR’s Mean Return is 0.64 points higher than that of EFA and its R-squared is 20.75 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than EFA. The Alpha and Beta of IJR are 4.17 points lower and 0.22 points higher than EFA’s Alpha and Beta.
Performance
Annual Returns
| Year | IJR | EFA |
| 2020 | 11.24% | 7.92% |
| 2019 | 22.79% | 21.94% |
| 2018 | -8.43% | -13.83% |
| 2017 | 13.2% | 24.94% |
| 2016 | 26.49% | 0.96% |
| 2015 | -2.0% | -0.9% |
| 2014 | 5.67% | -5.04% |
| 2013 | 41.36% | 22.62% |
| 2012 | 16.28% | 17.22% |
| 2011 | 0.9% | -12.18% |
| 2010 | 26.14% | 7.52% |
IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% respectively.
The year 2017 was the strongest year for EFA, returning 24.94% on an annual basis. The poorest year for EFA in the last ten years was 2018, with a yield of -13.83%. Most years the iShares MSCI EAFE ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 0.96%, 7.52%, and 7.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IJR | $10,000 | $38,800 | 13.97% |
| EFA | $10,000 | $18,269 | 6.47% |
A $10,000 investment in IJR would have resulted in a final balance of $38,800. This is a profit of $28,800 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.97%.
With a $10,000 investment in EFA, the end total would have been $18,269. This equates to a $8,269 profit over 11 years and a compound annual growth rate (CAGR) of 6.47%.
IJR’s CAGR is 7.50 percentage points higher than that of EFA and as a result, would have yielded $20,531 more on a $10,000 investment. Thus, IJR outperformed EFA by 7.50% annually.
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