IVW vs. VEU: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between IVW and VEU? And which fund is better?

The expense ratio of IVW is 0.10 percentage points higher than VEU’s (0.18% vs. 0.08%). IVW also has a higher exposure to the technology sector and a lower standard deviation. Overall, IVW has provided higher returns than VEU over the past ten years.

In this article, we’ll compare IVW vs. VEU. We’ll look at industry exposure and portfolio growth, as well as at their holdings and performance. Moreover, I’ll also discuss IVW’s and VEU’s annual returns, risk metrics, and fund composition and examine how these affect their overall returns.

Summary

IVW VEU
Name iShares S&P 500 Growth ETF Vanguard FTSE All-World ex-US Index Fund ETF Shares
Category Large Growth Foreign Large Blend
Issuer iShares Vanguard
AUM 35.72B 53.64B
Avg. Return 16.74% 6.64%
Div. Yield 0.61% 2.31%
Expense Ratio 0.18% 0.08%

The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

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%.

IVW’s dividend yield is 1.70% lower than that of VEU (0.61% vs. 2.31%). Also, IVW yielded on average 10.10% more per year over the past decade (16.74% vs. 6.64%). The expense ratio of IVW is 0.10 percentage points higher than VEU’s (0.18% vs. 0.08%).

Fund Composition

Industry Exposure

IVW vs. VEU - Industry Exposure

IVW VEU
Technology 37.8% 12.94%
Industrials 5.72% 12.19%
Energy 0.06% 4.69%
Communication Services 15.44% 7.44%
Utilities 0.47% 2.89%
Healthcare 11.88% 9.34%
Consumer Defensive 3.84% 8.28%
Real Estate 1.11% 3.04%
Financial Services 6.78% 18.46%
Consumer Cyclical 15.25% 12.57%
Basic Materials 1.65% 8.17%

The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

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%.

IVW is 24.86% more exposed to the Technology sector than VEU (37.8% vs 12.94%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 8.00% higher and 2.68% higher respectively (15.44% vs. 7.44% and 15.25% vs. 12.57%). In total, Utilities, Real Estate, and Basic Materials also make up 10.87% less of the fund’s holdings compared to VEU (3.23% vs. 14.10%).

Holdings

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

VEU - Holdings

VEU Holdings Weight
Tencent Holdings Ltd 1.57%
Alibaba Group Holding Ltd Ordinary Shares 1.4%
Nestle SA 1.22%
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%
Novartis AG 0.67%

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%.

Risk Analysis

IVW VEU
Mean Return 1.44 0.56
R-squared 93.82 98.44
Std. Deviation 13.77 15.08
Alpha 2.19 0.28
Beta 0.98 0.99
Sharpe Ratio 1.21 0.4
Treynor Ratio 17.24 5.12

The iShares S&P 500 Growth ETF (IVW) has a Mean Return of 1.44 with a Standard Deviation of 13.77 and a R-squared of 93.82. Its Treynor Ratio is 17.24 while IVW’s Sharpe Ratio is 1.21. Furthermore, the fund has a Beta of 0.98 and a Alpha of 2.19.

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Beta of 0.99 with a Standard Deviation of 15.08 and a Mean Return of 0.56. Its Alpha is 0.28 while VEU’s R-squared is 98.44. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Treynor Ratio of 5.12.

IVW’s Mean Return is 0.88 points higher than that of VEU and its R-squared is 4.62 points lower. With a Standard Deviation of 13.77, IVW is slightly less volatile than VEU. The Alpha and Beta of IVW are 1.91 points higher and 0.01 points lower than VEU’s Alpha and Beta.

Performance

Annual Returns

IVW vs. VEU - Annual Returns

Year IVW VEU
2020 33.21% 11.39%
2019 30.91% 21.63%
2018 -0.17% -13.97%
2017 27.2% 27.27%
2016 6.74% 4.77%
2015 5.33% -4.67%
2014 14.67% -4.05%
2013 32.48% 14.5%
2012 14.39% 18.55%
2011 4.49% -14.25%
2010 14.84% 11.85%

IVW had its best year in 2020 with an annual return of 33.21%. IVW’s worst year over the past decade yielded -0.17% and occurred in 2018. In most years the iShares S&P 500 Growth ETF provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 14.39%, 14.67%, and 14.84% 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.

Portfolio Growth

IVW vs. VEU - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
VEU $10,000 $18,507 6.64%

A $10,000 investment in IVW would have resulted in a final balance of $51,915. This is a profit of $41,915 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

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%.

IVW’s CAGR is 10.10 percentage points higher than that of VEU and as a result, would have yielded $33,408 more on a $10,000 investment. Thus, IVW outperformed VEU by 10.10% annually.


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