VBR vs. EFV: What’s The Difference?

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between VBR and EFV? And which fund is better?

The expense ratio of VBR is 0.32 percentage points lower than EFV’s (0.07% vs. 0.39%). VBR also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided higher returns than EFV over the past 11 years.

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

Summary

VBR EFV
Name Vanguard Small-Cap Value Index Fund ETF Shares iShares MSCI EAFE Value ETF
Category Small Value Foreign Large Value
Issuer Vanguard iShares
AUM 48.08B 14.37B
Avg. Return 12.28% 3.99%
Div. Yield 1.6% 2.94%
Expense Ratio 0.07% 0.39%

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

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%.

VBR’s dividend yield is 1.34% lower than that of EFV (1.6% vs. 2.94%). Also, VBR yielded on average 8.29% more per year over the past decade (12.28% vs. 3.99%). The expense ratio of VBR is 0.32 percentage points lower than EFV’s (0.07% vs. 0.39%).

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Fund Composition

Industry Exposure

VBR vs. EFV - Industry Exposure

VBR EFV
Technology 8.39% 2.98%
Industrials 18.44% 11.6%
Energy 5.15% 6.6%
Communication Services 1.77% 6.46%
Utilities 3.65% 6.14%
Healthcare 7.16% 9.19%
Consumer Defensive 4.36% 6.82%
Real Estate 10.92% 5.06%
Financial Services 20.04% 26.55%
Consumer Cyclical 13.82% 9.0%
Basic Materials 6.31% 9.59%

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

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%.

VBR is 6.51% less exposed to the Financial Services sector than EFV (20.04% vs 26.55%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 6.84% higher and 4.82% higher respectively (18.44% vs. 11.6% and 13.82% vs. 9.0%). In total, Utilities, Consumer Defensive, and Energy also make up 6.40% less of the fund’s holdings compared to EFV (13.16% vs. 19.56%).

Holdings

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

EFV - Holdings

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%.

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Risk Analysis

VBR EFV
Mean Return 1.08 0.42
R-squared 82.2 92.15
Std. Deviation 18.37 16.53
Alpha -5.09 -1.77
Beta 1.23 1.05
Sharpe Ratio 0.67 0.26
Treynor Ratio 9.15 2.92

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Beta of 1.23 with a Sharpe Ratio of 0.67 and a Alpha of -5.09. Its Treynor Ratio is 9.15 while VBR’s R-squared is 82.2. Furthermore, the fund has a Standard Deviation of 18.37 and a Mean Return of 1.08.

The iShares MSCI EAFE Value ETF (EFV) has a Alpha of -1.77 with a R-squared of 92.15 and a Beta of 1.05. Its Sharpe Ratio is 0.26 while EFV’s Mean Return is 0.42. Furthermore, the fund has a Treynor Ratio of 2.92 and a Standard Deviation of 16.53.

VBR’s Mean Return is 0.66 points higher than that of EFV and its R-squared is 9.95 points lower. With a Standard Deviation of 18.37, VBR is slightly more volatile than EFV. The Alpha and Beta of VBR are 3.32 points lower and 0.18 points higher than EFV’s Alpha and Beta.

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Performance

Annual Returns

VBR vs. EFV - Annual Returns

Year VBR EFV
2020 5.82% -2.78%
2019 22.76% 15.97%
2018 -12.22% -14.88%
2017 11.79% 21.22%
2016 24.8% 4.87%
2015 -4.67% -5.89%
2014 10.55% -5.65%
2013 36.57% 22.61%
2012 18.78% 17.52%
2011 -4.05% -12.24%
2010 24.97% 3.18%

VBR had its best year in 2013 with an annual return of 36.57%. VBR’s worst year over the past decade yielded -12.22% and occurred in 2018. In most years the Vanguard Small-Cap Value Index Fund ETF Shares provided moderate returns such as in 2014, 2017, and 2012 where annual returns amounted to 10.55%, 11.79%, and 18.78% 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

VBR vs. EFV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VBR $10,000 $32,611 12.28%
EFV $10,000 $14,134 3.99%

A $10,000 investment in VBR would have resulted in a final balance of $32,611. This is a profit of $22,611 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.28%.

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%.

VBR’s CAGR is 8.29 percentage points higher than that of EFV and as a result, would have yielded $18,477 more on a $10,000 investment. Thus, VBR outperformed EFV by 8.29% annually.


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