The SPDR S&P 500 ETF Trust (SPY) and the iShares MSCI EAFE ETF (EFA) are both among the Top 100 ETFs. SPY is a SPDR State Street Global Advisors Large Blend fund and EFA is a iShares Foreign Large Blend fund. So, what’s the difference between SPY and EFA? And which fund is better?
The expense ratio of SPY is 0.23 percentage points lower than EFA’s (0.09% vs. 0.32%). SPY also has a higher exposure to the technology sector and a lower standard deviation. Overall, SPY has provided higher returns than EFA over the past ten years.
In this article, we’ll compare SPY vs. EFA. We’ll look at industry exposure and portfolio growth, as well as at their performance and risk metrics. Moreover, I’ll also discuss SPY’s and EFA’s fund composition, annual returns, and holdings and examine how these affect their overall returns.
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Summary
| SPY | EFA | |
| Name | SPDR S&P 500 ETF Trust | iShares MSCI EAFE ETF |
| Category | Large Blend | Foreign Large Blend |
| Issuer | SPDR State Street Global Advisors | iShares |
| AUM | 374.03B | 56.77B |
| Avg. Return | 14.41% | 6.47% |
| Div. Yield | 1.3% | 2.28% |
| Expense Ratio | 0.09% | 0.32% |
If you are also looking for SPY vs. IWR, You can check out all those details.
The SPDR S&P 500 ETF Trust (SPY) is a Large Blend fund that is issued by SPDR State Street Global Advisors. It currently has 374.03B total assets under management and has yielded an average annual return of 14.41% over the past 10 years. The fund has a dividend yield of 1.3% with an expense ratio of 0.09%.
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%.
SPY’s dividend yield is 0.98% lower than that of EFA (1.3% vs. 2.28%). Also, SPY yielded on average 7.94% more per year over the past decade (14.41% vs. 6.47%). The expense ratio of SPY is 0.23 percentage points lower than EFA’s (0.09% vs. 0.32%).
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Fund Composition
Industry Exposure
| SPY | EFA | |
| Technology | 24.22% | 9.68% |
| Industrials | 8.86% | 15.01% |
| Energy | 2.86% | 3.51% |
| Communication Services | 11.14% | 5.68% |
| Utilities | 2.45% | 3.35% |
| Healthcare | 13.09% | 12.8% |
| Consumer Defensive | 6.32% | 10.56% |
| Real Estate | 2.57% | 3.01% |
| Financial Services | 14.23% | 16.88% |
| Consumer Cyclical | 12.0% | 11.62% |
| Basic Materials | 2.27% | 7.91% |
The SPDR S&P 500 ETF Trust (SPY) has the most exposure to the Technology sector at 24.22%. This is followed by Financial Services and Healthcare at 14.23% and 13.09% respectively. Utilities (2.45%), Real Estate (2.57%), and Energy (2.86%) only make up 7.88% of the fund’s total assets.
A pretty close comparison I have also cover is SPY vs. VXUS.
SPY’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.0%, and 13.09%.
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%.
SPY is 14.54% more exposed to the Technology sector than EFA (24.22% vs 9.68%). SPY’s exposure to Financial Services and Healthcare stocks is 2.65% lower and 0.29% higher respectively (14.23% vs. 16.88% and 13.09% vs. 12.8%). In total, Utilities, Real Estate, and Energy also make up 1.99% less of the fund’s holdings compared to EFA (7.88% vs. 9.87%).
Holdings
If you need another SPY comparison I have one SPY vs. DIA right here.
| SPY Holdings | Weight |
| Apple Inc | 5.9% |
| Microsoft Corp | 5.6% |
| Amazon.com Inc | 4.05% |
| Facebook Inc A | 2.29% |
| Alphabet Inc A | 2.02% |
| Alphabet Inc Class C | 1.96% |
| Berkshire Hathaway Inc Class B | 1.45% |
| Tesla Inc | 1.44% |
| NVIDIA Corp | 1.37% |
| JPMorgan Chase & Co | 1.29% |
SPY’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.9%, 5.6%, 4.05%, 2.29%, and 2.02%.
Alphabet Inc Class C (1.96%), Berkshire Hathaway Inc Class B (1.45%), and Tesla Inc (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SPY’s holdings at 1.37% and 1.29%.
| EFA Holdings | Weight |
| Nestle SA | 2.11% |
| ASML Holding NV | 1.69% |
| Roche Holding AG | 1.55% |
| LVMH Moet Hennessy Louis Vuitton SE | 1.28% |
| Novartis AG | 1.19% |
| Toyota Motor Corp | 1.09% |
| AstraZeneca PLC | 0.92% |
| Unilever PLC | 0.9% |
| AIA Group Ltd | 0.88% |
| SAP SE | 0.86% |
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%.
Risk Analysis
| SPY | EFA | |
| Mean Return | 1.23 | 0.57 |
| R-squared | 100 | 96.78 |
| Std. Deviation | 13.56 | 15.01 |
| Alpha | -0.09 | 0.47 |
| Beta | 1 | 0.98 |
| Sharpe Ratio | 1.04 | 0.41 |
| Treynor Ratio | 14.12 | 5.33 |
The SPDR S&P 500 ETF Trust (SPY) has a Treynor Ratio of 14.12 with a Sharpe Ratio of 1.04 and a Alpha of -0.09. Its Standard Deviation is 13.56 while SPY’s R-squared is 100. Furthermore, the fund has a Mean Return of 1.23 and a Beta of 1.
The SPY vs. IUSB is another great set of index’s and ETF to look at.
The iShares MSCI EAFE ETF (EFA) has a Mean Return of 0.57 with a Beta of 0.98 and a Alpha of 0.47. Its Treynor Ratio is 5.33 while EFA’s Sharpe Ratio is 0.41. Furthermore, the fund has a Standard Deviation of 15.01 and a R-squared of 96.78.
SPY’s Mean Return is 0.66 points higher than that of EFA and its R-squared is 3.22 points higher. With a Standard Deviation of 13.56, SPY is slightly less volatile than EFA. The Alpha and Beta of SPY are 0.56 points lower and 0.02 points higher than EFA’s Alpha and Beta.
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Performance
Annual Returns
| Year | SPY | EFA |
| 2020 | 18.25% | 7.92% |
| 2019 | 31.29% | 21.94% |
| 2018 | -4.45% | -13.83% |
| 2017 | 21.69% | 24.94% |
| 2016 | 11.8% | 0.96% |
| 2015 | 1.34% | -0.9% |
| 2014 | 13.53% | -5.04% |
| 2013 | 32.21% | 22.62% |
| 2012 | 15.84% | 17.22% |
| 2011 | 2.06% | -12.18% |
| 2010 | 14.93% | 7.52% |
SPY had its best year in 2013 with an annual return of 32.21%. SPY’s worst year over the past decade yielded -4.45% and occurred in 2018. In most years the SPDR S&P 500 ETF Trust provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.53%, 14.93%, and 15.84% 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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SPY | $10,000 | $41,712 | 14.41% |
| EFA | $10,000 | $18,269 | 6.47% |
A $10,000 investment in SPY would have resulted in a final balance of $41,712. This is a profit of $31,712 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.41%.
If you need more comparisons to read try SPY vs. MBB.
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%.
SPY’s CAGR is 7.94 percentage points higher than that of EFA and as a result, would have yielded $23,443 more on a $10,000 investment. Thus, SPY outperformed EFA by 7.94% annually.
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