The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between VB and EFV? And which fund is better?
The expense ratio of VB is 0.34 percentage points lower than EFV’s (0.05% vs. 0.39%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than EFV over the past ten years.
In this article, we’ll compare VB vs. EFV. We’ll look at annual returns and portfolio growth, as well as at their risk metrics and performance. Moreover, I’ll also discuss VB’s and EFV’s holdings, industry exposure, and fund composition and examine how these affect their overall returns.
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Summary
| VB | EFV | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | iShares MSCI EAFE Value ETF |
| Category | Small Blend | Foreign Large Value |
| Issuer | Vanguard | iShares |
| AUM | 137.72B | 14.37B |
| Avg. Return | 14.25% | 3.99% |
| Div. Yield | 1.14% | 2.94% |
| Expense Ratio | 0.05% | 0.39% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
The iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
VB’s dividend yield is 1.80% lower than that of EFV (1.14% vs. 2.94%). Also, VB yielded on average 10.26% more per year over the past decade (14.25% vs. 3.99%). The expense ratio of VB is 0.34 percentage points lower than EFV’s (0.05% vs. 0.39%).
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Fund Composition
Industry Exposure
| VB | EFV | |
| Technology | 16.85% | 2.98% |
| Industrials | 16.11% | 11.6% |
| Energy | 3.67% | 6.6% |
| Communication Services | 2.4% | 6.46% |
| Utilities | 2.19% | 6.14% |
| Healthcare | 14.34% | 9.19% |
| Consumer Defensive | 4.14% | 6.82% |
| Real Estate | 9.56% | 5.06% |
| Financial Services | 13.06% | 26.55% |
| Consumer Cyclical | 13.03% | 9.0% |
| Basic Materials | 4.63% | 9.59% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
The iShares MSCI EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.
EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.
VB is 13.87% more exposed to the Technology sector than EFV (16.85% vs 2.98%). VB’s exposure to Industrials and Healthcare stocks is 4.51% higher and 5.15% higher respectively (16.11% vs. 11.6% and 14.34% vs. 9.19%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.67% less of the fund’s holdings compared to EFV (10.21% vs. 19.88%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
| EFV Holdings | Weight |
| Novartis AG | 2.41% |
| Toyota Motor Corp | 2.21% |
| Commonwealth Bank of Australia | 1.59% |
| Siemens AG | 1.45% |
| Sanofi SA | 1.42% |
| HSBC Holdings PLC | 1.4% |
| TotalEnergies SE | 1.35% |
| Allianz SE | 1.23% |
| GlaxoSmithKline PLC | 1.18% |
| Rio Tinto PLC | 1.1% |
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
Risk Analysis
| VB | EFV | |
| Mean Return | 1.15 | 0.42 |
| R-squared | 85.03 | 92.15 |
| Std. Deviation | 17.82 | 16.53 |
| Alpha | -4.02 | -1.77 |
| Beta | 1.21 | 1.05 |
| Sharpe Ratio | 0.74 | 0.26 |
| Treynor Ratio | 10.15 | 2.92 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Sharpe Ratio of 0.74 with a Treynor Ratio of 10.15 and a Alpha of -4.02. Its Mean Return is 1.15 while VB’s Standard Deviation is 17.82. Furthermore, the fund has a Beta of 1.21 and a R-squared of 85.03.
The iShares MSCI EAFE Value ETF (EFV) has a Beta of 1.05 with a R-squared of 92.15 and a Mean Return of 0.42. Its Alpha is -1.77 while EFV’s Sharpe Ratio is 0.26. Furthermore, the fund has a Treynor Ratio of 2.92 and a Standard Deviation of 16.53.
VB’s Mean Return is 0.73 points higher than that of EFV and its R-squared is 7.12 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than EFV. The Alpha and Beta of VB are 2.25 points lower and 0.16 points higher than EFV’s Alpha and Beta.
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Performance
Annual Returns
| Year | VB | EFV |
| 2020 | 19.08% | -2.78% |
| 2019 | 27.37% | 15.97% |
| 2018 | -9.3% | -14.88% |
| 2017 | 16.24% | 21.22% |
| 2016 | 18.31% | 4.87% |
| 2015 | -3.65% | -5.89% |
| 2014 | 7.51% | -5.65% |
| 2013 | 37.8% | 22.61% |
| 2012 | 18.22% | 17.52% |
| 2011 | -2.68% | -12.24% |
| 2010 | 27.89% | 3.18% |
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% respectively.
The year 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| EFV | $10,000 | $14,134 | 3.99% |
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
VB’s CAGR is 10.26 percentage points higher than that of EFV and as a result, would have yielded $25,600 more on a $10,000 investment. Thus, VB outperformed EFV by 10.26% annually.
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