The iShares Russell 1000 Growth ETF (IWF) and the iShares MSCI EAFE ETF (EFA) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and EFA is a iShares Foreign Large Blend fund. So, what’s the difference between IWF and EFA? And which fund is better?
The expense ratio of IWF is 0.13 percentage points lower than EFA’s (0.19% vs. 0.32%). IWF also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWF has provided higher returns than EFA over the past ten years.
In this article, we’ll compare IWF vs. EFA. We’ll look at risk metrics and portfolio growth, as well as at their fund composition and annual returns. Moreover, I’ll also discuss IWF’s and EFA’s holdings, industry exposure, and performance and examine how these affect their overall returns.
|Name||iShares Russell 1000 Growth ETF||iShares MSCI EAFE ETF|
|Category||Large Growth||Foreign Large Blend|
The iShares Russell 1000 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% with an expense ratio of 0.19%.
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%.
IWF’s dividend yield is 1.76% lower than that of EFA (0.52% vs. 2.28%). Also, IWF yielded on average 11.25% more per year over the past decade (17.72% vs. 6.47%). The expense ratio of IWF is 0.13 percentage points lower than EFA’s (0.19% vs. 0.32%).
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The iShares Russell 1000 Growth ETF (IWF) has the most exposure to the Technology sector at 39.29%. This is followed by Consumer Cyclical and Communication Services at 17.62% and 12.82% respectively. Energy (0.28%), Basic Materials (1.01%), and Real Estate (1.85%) only make up 3.14% of the fund’s total assets.
IWF’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Communication Services stocks at 4.31%, 6.19%, 7.36%, 9.23%, and 12.82%.
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%.
IWF is 29.61% more exposed to the Technology sector than EFA (39.29% vs 9.68%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 6.00% higher and 7.14% higher respectively (17.62% vs. 11.62% and 12.82% vs. 5.68%). In total, Energy, Basic Materials, and Real Estate also make up 11.29% less of the fund’s holdings compared to EFA (3.14% vs. 14.43%).
|Facebook Inc Class A||3.91%|
|Alphabet Inc Class A||3.2%|
|Alphabet Inc Class C||3.03%|
|Visa Inc Class A||1.91%|
|The Home Depot Inc||1.62%|
IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.
Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.
|ASML Holding NV||1.69%|
|Roche Holding AG||1.55%|
|LVMH Moet Hennessy Louis Vuitton SE||1.28%|
|Toyota Motor Corp||1.09%|
|AIA Group Ltd||0.88%|
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%.
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The iShares Russell 1000 Growth ETF (IWF) has a Beta of 1.03 with a R-squared of 92.93 and a Standard Deviation of 14.42. Its Treynor Ratio is 17.1 while IWF’s Sharpe Ratio is 1.19. Furthermore, the fund has a Alpha of 2.16 and a Mean Return of 1.48.
The iShares MSCI EAFE ETF (EFA) has a Treynor Ratio of 5.33 with a Sharpe Ratio of 0.41 and a R-squared of 96.78. Its Alpha is 0.47 while EFA’s Standard Deviation is 15.01. Furthermore, the fund has a Beta of 0.98 and a Mean Return of 0.57.
IWF’s Mean Return is 0.91 points higher than that of EFA and its R-squared is 3.85 points lower. With a Standard Deviation of 14.42, IWF is slightly less volatile than EFA. The Alpha and Beta of IWF are 1.69 points higher and 0.05 points higher than EFA’s Alpha and Beta.
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IWF had its best year in 2020 with an annual return of 38.21%. IWF’s worst year over the past decade yielded -1.68% and occurred in 2018. In most years the iShares Russell 1000 Growth ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.84%, 15.03%, and 16.47% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWF would have resulted in a final balance of $55,920. This is a profit of $45,920 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.72%.
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%.
IWF’s CAGR is 11.25 percentage points higher than that of EFA and as a result, would have yielded $37,651 more on a $10,000 investment. Thus, IWF outperformed EFA by 11.25% annually.
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