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.
|Name||Vanguard Small-Cap Value Index Fund ETF Shares||iShares MSCI EAFE Value ETF|
|Category||Small Value||Foreign Large Value|
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%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
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%).
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|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%.
|Toyota Motor Corp||2.21%|
|Commonwealth Bank of Australia||1.59%|
|HSBC Holdings PLC||1.4%|
|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%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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.
BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.