The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between IJR and VEU? And which fund is better?
The expense ratio of IJR is 0.02 percentage points lower than VEU’s (0.06% vs. 0.08%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than VEU over the past ten years.
In this article, we’ll compare IJR vs. VEU. We’ll look at portfolio growth and performance, as well as at their fund composition and holdings. Moreover, I’ll also discuss IJR’s and VEU’s annual returns, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||iShares Core S&P Small-Cap ETF||Vanguard FTSE All-World ex-US Index Fund ETF Shares|
|Category||Small Blend||Foreign Large Blend|
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 Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
IJR’s dividend yield is 1.35% lower than that of VEU (0.96% vs. 2.31%). Also, IJR yielded on average 7.33% more per year over the past decade (13.97% vs. 6.64%). The expense ratio of IJR is 0.02 percentage points lower than VEU’s (0.06% vs. 0.08%).
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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 Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
IJR is 5.12% more exposed to the Industrials sector than VEU (17.31% vs 12.19%). IJR’s exposure to Financial Services and Technology stocks is 2.55% lower and 1.38% higher respectively (15.91% vs. 18.46% and 14.32% vs. 12.94%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.81% less of the fund’s holdings compared to VEU (10.60% vs. 20.41%).
|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
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%.
|Tencent Holdings Ltd||1.57%|
|Alibaba Group Holding Ltd Ordinary Shares||1.4%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.98%|
|ASML Holding NV||0.95%|
|Taiwan Semiconductor Manufacturing Co Ltd ADR||0.91%|
|Roche Holding AG||0.91%|
|Toyota Motor Corp||0.75%|
|LVMH Moet Hennessy Louis Vuitton SE||0.68%|
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
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The iShares Core S&P Small-Cap ETF (IJR) has a Alpha of -3.7 with a Beta of 1.2 and a Mean Return of 1.21. Its Treynor Ratio is 10.77 while IJR’s Standard Deviation is 18.68. Furthermore, the fund has a R-squared of 76.03 and a Sharpe Ratio of 0.74.
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Alpha of 0.28 with a Treynor Ratio of 5.12 and a Beta of 0.99. Its Standard Deviation is 15.08 while VEU’s R-squared is 98.44. Furthermore, the fund has a Mean Return of 0.56 and a Sharpe Ratio of 0.4.
IJR’s Mean Return is 0.65 points higher than that of VEU and its R-squared is 22.41 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VEU. The Alpha and Beta of IJR are 3.98 points lower and 0.21 points higher than VEU’s Alpha and Beta.
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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 VEU, returning 27.27% on an annual basis. The poorest year for VEU in the last ten years was 2011, with a yield of -14.25%. Most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares has given investors modest returns, such as in 2016, 2020, and 2010, when gains were 4.77%, 11.39%, and 11.85% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VEU, the end total would have been $18,507. This equates to a $8,507 profit over 11 years and a compound annual growth rate (CAGR) of 6.64%.
IJR’s CAGR is 7.33 percentage points higher than that of VEU and as a result, would have yielded $20,293 more on a $10,000 investment. Thus, IJR outperformed VEU by 7.33% annually.
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