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SPY vs. VEU: What’s The Difference?

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

The expense ratio of SPY is 0.01 percentage points higher than VEU’s (0.09% vs. 0.08%). SPY also has a higher exposure to the technology sector and a lower standard deviation. Overall, SPY has provided higher returns than VEU over the past ten years.

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

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Summary

SPYVEU
NameSPDR S&P 500 ETF TrustVanguard FTSE All-World ex-US Index Fund ETF Shares
CategoryLarge BlendForeign Large Blend
IssuerSPDR State Street Global AdvisorsVanguard
AUM374.03B53.64B
Avg. Return14.41%6.64%
Div. Yield1.3%2.31%
Expense Ratio0.09%0.08%

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 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%.

SPY’s dividend yield is 1.01% lower than that of VEU (1.3% vs. 2.31%). Also, SPY yielded on average 7.77% more per year over the past decade (14.41% vs. 6.64%). The expense ratio of SPY is 0.01 percentage points higher than VEU’s (0.09% vs. 0.08%).

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Fund Composition

Industry Exposure

SPY vs. VEU - Industry Exposure

SPYVEU
Technology24.22%12.94%
Industrials8.86%12.19%
Energy2.86%4.69%
Communication Services11.14%7.44%
Utilities2.45%2.89%
Healthcare13.09%9.34%
Consumer Defensive6.32%8.28%
Real Estate2.57%3.04%
Financial Services14.23%18.46%
Consumer Cyclical12.0%12.57%
Basic Materials2.27%8.17%

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.

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 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%.

SPY is 11.28% more exposed to the Technology sector than VEU (24.22% vs 12.94%). SPY’s exposure to Financial Services and Healthcare stocks is 4.23% lower and 3.75% higher respectively (14.23% vs. 18.46% and 13.09% vs. 9.34%). In total, Utilities, Real Estate, and Energy also make up 2.74% less of the fund’s holdings compared to VEU (7.88% vs. 10.62%).

Holdings

SPY - Holdings

SPY HoldingsWeight
Apple Inc5.9%
Microsoft Corp5.6%
Amazon.com Inc4.05%
Facebook Inc A2.29%
Alphabet Inc A2.02%
Alphabet Inc Class C1.96%
Berkshire Hathaway Inc Class B1.45%
Tesla Inc1.44%
NVIDIA Corp1.37%
JPMorgan Chase & Co1.29%

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%.

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

SPYVEU
Mean Return1.230.56
R-squared10098.44
Std. Deviation13.5615.08
Alpha-0.090.28
Beta10.99
Sharpe Ratio1.040.4
Treynor Ratio14.125.12

The SPDR S&P 500 ETF Trust (SPY) has a Standard Deviation of 13.56 with a Sharpe Ratio of 1.04 and a R-squared of 100. Its Treynor Ratio is 14.12 while SPY’s Beta is 1. Furthermore, the fund has a Alpha of -0.09 and a Mean Return of 1.23.

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

SPY’s Mean Return is 0.67 points higher than that of VEU and its R-squared is 1.56 points higher. With a Standard Deviation of 13.56, SPY is slightly less volatile than VEU. The Alpha and Beta of SPY are 0.37 points lower and 0.01 points higher than VEU’s Alpha and Beta.

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Performance

Annual Returns

SPY vs. VEU - Annual Returns

YearSPYVEU
202018.25%11.39%
201931.29%21.63%
2018-4.45%-13.97%
201721.69%27.27%
201611.8%4.77%
20151.34%-4.67%
201413.53%-4.05%
201332.21%14.5%
201215.84%18.55%
20112.06%-14.25%
201014.93%11.85%

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 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

SPY vs. VEU - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SPY$10,000$41,71214.41%
VEU$10,000$18,5076.64%

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%.

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%.

SPY’s CAGR is 7.77 percentage points higher than that of VEU and as a result, would have yielded $23,205 more on a $10,000 investment. Thus, SPY outperformed VEU by 7.77% annually.


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