The iShares Russell 1000 Value ETF (IWD) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between IWD and VEU? And which fund is better?
The expense ratio of IWD is 0.11 percentage points higher than VEU’s (0.19% vs. 0.08%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided higher returns than VEU over the past ten years.
In this article, we’ll compare IWD vs. VEU. We’ll look at performance and annual returns, as well as at their fund composition and holdings. Moreover, I’ll also discuss IWD’s and VEU’s industry exposure, risk metrics, and portfolio growth and examine how these affect their overall returns.
Summary
| IWD | VEU | |
| Name | iShares Russell 1000 Value ETF | Vanguard FTSE All-World ex-US Index Fund ETF Shares |
| Category | Large Value | Foreign Large Blend |
| Issuer | iShares | Vanguard |
| AUM | 54.1B | 53.64B |
| Avg. Return | 11.40% | 6.64% |
| Div. Yield | 1.57% | 2.31% |
| Expense Ratio | 0.19% | 0.08% |
The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
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%.
IWD’s dividend yield is 0.74% lower than that of VEU (1.57% vs. 2.31%). Also, IWD yielded on average 4.76% more per year over the past decade (11.40% vs. 6.64%). The expense ratio of IWD is 0.11 percentage points higher than VEU’s (0.19% vs. 0.08%).
Fund Composition
Industry Exposure
| IWD | VEU | |
| Technology | 10.28% | 12.94% |
| Industrials | 11.77% | 12.19% |
| Energy | 4.76% | 4.69% |
| Communication Services | 8.67% | 7.44% |
| Utilities | 4.88% | 2.89% |
| Healthcare | 17.78% | 9.34% |
| Consumer Defensive | 7.76% | 8.28% |
| Real Estate | 4.94% | 3.04% |
| Financial Services | 20.43% | 18.46% |
| Consumer Cyclical | 5.62% | 12.57% |
| Basic Materials | 3.1% | 8.17% |
The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.
IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.
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%.
IWD is 1.97% more exposed to the Financial Services sector than VEU (20.43% vs 18.46%). IWD’s exposure to Healthcare and Industrials stocks is 8.44% higher and 0.42% lower respectively (17.78% vs. 9.34% and 11.77% vs. 12.19%). In total, Energy, Utilities, and Real Estate also make up 3.96% more of the fund’s holdings compared to VEU (14.58% vs. 10.62%).
Holdings
| IWD Holdings | Weight |
| Berkshire Hathaway Inc Class B | 2.58% |
| JPMorgan Chase & Co | 2.25% |
| Johnson & Johnson | 2.24% |
| UnitedHealth Group Inc | 1.78% |
| Procter & Gamble Co | 1.71% |
| The Walt Disney Co | 1.5% |
| Bank of America Corp | 1.43% |
| Comcast Corp Class A | 1.33% |
| Exxon Mobil Corp | 1.2% |
| Pfizer Inc | 1.18% |
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
| 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
| IWD | VEU | |
| Mean Return | 1.03 | 0.56 |
| R-squared | 92.38 | 98.44 |
| Std. Deviation | 14.35 | 15.08 |
| Alpha | -3.23 | 0.28 |
| Beta | 1.02 | 0.99 |
| Sharpe Ratio | 0.81 | 0.4 |
| Treynor Ratio | 11.06 | 5.12 |
The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a Mean Return of 1.03 and a Beta of 1.02. Its Alpha is -3.23 while IWD’s Sharpe Ratio is 0.81. Furthermore, the fund has a R-squared of 92.38 and a Standard Deviation of 14.35.
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Sharpe Ratio of 0.4 with a Standard Deviation of 15.08 and a Treynor Ratio of 5.12. Its Mean Return is 0.56 while VEU’s Alpha is 0.28. Furthermore, the fund has a R-squared of 98.44 and a Beta of 0.99.
IWD’s Mean Return is 0.47 points higher than that of VEU and its R-squared is 6.06 points lower. With a Standard Deviation of 14.35, IWD is slightly less volatile than VEU. The Alpha and Beta of IWD are 3.51 points lower and 0.03 points higher than VEU’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | VEU |
| 2020 | 2.67% | 11.39% |
| 2019 | 26.34% | 21.63% |
| 2018 | -8.4% | -13.97% |
| 2017 | 13.47% | 27.27% |
| 2016 | 17.09% | 4.77% |
| 2015 | -3.95% | -4.67% |
| 2014 | 13.21% | -4.05% |
| 2013 | 32.18% | 14.5% |
| 2012 | 17.28% | 18.55% |
| 2011 | 0.21% | -14.25% |
| 2010 | 15.3% | 11.85% |
IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| VEU | $10,000 | $18,507 | 6.64% |
A $10,000 investment in IWD would have resulted in a final balance of $30,746. This is a profit of $20,746 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
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%.
IWD’s CAGR is 4.76 percentage points higher than that of VEU and as a result, would have yielded $12,239 more on a $10,000 investment. Thus, IWD outperformed VEU by 4.76% annually.
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