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IWF vs. VEU: What’s The Difference?

The iShares Russell 1000 Growth ETF (IWF) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between IWF and VEU? And which fund is better?

The expense ratio of IWF is 0.11 percentage points higher than VEU’s (0.19% vs. 0.08%). IWF also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWF has provided higher returns than VEU over the past ten years.

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

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Summary

IWFVEU
NameiShares Russell 1000 Growth ETFVanguard FTSE All-World ex-US Index Fund ETF Shares
CategoryLarge GrowthForeign Large Blend
IssueriSharesVanguard
AUM72.16B53.64B
Avg. Return17.72%6.64%
Div. Yield0.52%2.31%
Expense Ratio0.19%0.08%

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 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%.

IWF’s dividend yield is 1.79% lower than that of VEU (0.52% vs. 2.31%). Also, IWF yielded on average 11.09% more per year over the past decade (17.72% vs. 6.64%). The expense ratio of IWF is 0.11 percentage points higher than VEU’s (0.19% vs. 0.08%).

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Fund Composition

Industry Exposure

IWF vs. VEU - Industry Exposure

IWFVEU
Technology39.29%12.94%
Industrials6.19%12.19%
Energy0.28%4.69%
Communication Services12.82%7.44%
Utilities0.03%2.89%
Healthcare9.23%9.34%
Consumer Defensive4.31%8.28%
Real Estate1.85%3.04%
Financial Services7.36%18.46%
Consumer Cyclical17.62%12.57%
Basic Materials1.01%8.17%

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 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%.

IWF is 26.35% more exposed to the Technology sector than VEU (39.29% vs 12.94%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 5.05% higher and 5.38% higher respectively (17.62% vs. 12.57% and 12.82% vs. 7.44%). In total, Energy, Basic Materials, and Real Estate also make up 12.76% less of the fund’s holdings compared to VEU (3.14% vs. 15.90%).

Holdings

IWF - Holdings

IWF HoldingsWeight
Apple Inc10.51%
Microsoft Corp9.85%
Amazon.com Inc6.63%
Facebook Inc Class A3.91%
Alphabet Inc Class A3.2%
Alphabet Inc Class C3.03%
Tesla Inc2.45%
NVIDIA Corp2.14%
Visa Inc Class A1.91%
The Home Depot Inc1.62%

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%.

VEU - Holdings

VEU HoldingsWeight
Tencent Holdings Ltd1.57%
Alibaba Group Holding Ltd Ordinary Shares1.4%
Nestle SA1.22%
Taiwan Semiconductor Manufacturing Co Ltd0.98%
ASML Holding NV0.95%
Taiwan Semiconductor Manufacturing Co Ltd ADR0.91%
Roche Holding AG0.91%
Toyota Motor Corp0.75%
LVMH Moet Hennessy Louis Vuitton SE0.68%
Novartis AG0.67%

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%.

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Risk Analysis

IWFVEU
Mean Return1.480.56
R-squared92.9398.44
Std. Deviation14.4215.08
Alpha2.160.28
Beta1.030.99
Sharpe Ratio1.190.4
Treynor Ratio17.15.12

The iShares Russell 1000 Growth ETF (IWF) has a Alpha of 2.16 with a R-squared of 92.93 and a Sharpe Ratio of 1.19. Its Beta is 1.03 while IWF’s Standard Deviation is 14.42. Furthermore, the fund has a Mean Return of 1.48 and a Treynor Ratio of 17.1.

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

IWF’s Mean Return is 0.92 points higher than that of VEU and its R-squared is 5.51 points lower. With a Standard Deviation of 14.42, IWF is slightly less volatile than VEU. The Alpha and Beta of IWF are 1.88 points higher and 0.04 points higher than VEU’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. VEU - Annual Returns

YearIWFVEU
202038.21%11.39%
201936.08%21.63%
2018-1.68%-13.97%
201729.96%27.27%
20166.92%4.77%
20155.48%-4.67%
201412.84%-4.05%
201333.19%14.5%
201215.03%18.55%
20112.47%-14.25%
201016.47%11.85%

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 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

IWF vs. VEU - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWF$10,000$55,92017.72%
VEU$10,000$18,5076.64%

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 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%.

IWF’s CAGR is 11.09 percentage points higher than that of VEU and as a result, would have yielded $37,413 more on a $10,000 investment. Thus, IWF outperformed VEU by 11.09% annually.


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