The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between VCIT and EFV? And which fund is better?
The expense ratio of VCIT is 0.34 percentage points lower than EFV’s (0.05% vs. 0.39%). VCIT is mostly comprised of BBB bonds while EFV has a high exposure to the financial services sector. Overall, VCIT has provided higher returns than EFV over the past ten years.
In this article, we’ll compare VCIT vs. EFV. We’ll look at annual returns and fund composition, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss VCIT’s and EFV’s holdings, risk metrics, and performance and examine how these affect their overall returns.
|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||iShares MSCI EAFE Value ETF|
|Category||Corporate Bond||Foreign Large Value|
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% 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%.
VCIT’s dividend yield is 0.61% lower than that of EFV (2.33% vs. 2.94%). Also, VCIT yielded on average 1.85% more per year over the past decade (5.84% vs. 3.99%). The expense ratio of VCIT is 0.34 percentage points lower than EFV’s (0.05% vs. 0.39%).
|VCIT Bond Sectors||Weight|
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
|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%.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Standard Deviation of 5.08 with a Sharpe Ratio of 0.91 and a Treynor Ratio of 3.43. Its Alpha is 0.89 while VCIT’s Beta is 1.35. Furthermore, the fund has a Mean Return of 0.44 and a R-squared of 63.18.
The iShares MSCI EAFE Value ETF (EFV) has a R-squared of 92.15 with a Mean Return of 0.42 and a Sharpe Ratio of 0.26. Its Standard Deviation is 16.53 while EFV’s Beta is 1.05. Furthermore, the fund has a Treynor Ratio of 2.92 and a Alpha of -1.77.
VCIT’s Mean Return is 0.02 points higher than that of EFV and its R-squared is 28.97 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than EFV. The Alpha and Beta of VCIT are 2.66 points higher and 0.30 points higher than EFV’s Alpha and Beta.
VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% 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 VCIT would have resulted in a final balance of $17,439. This is a profit of $7,439 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.84%.
With a $10,000 investment in EFV, the end total would have been $13,698. This equates to a $3,698 profit over 10 years and a compound annual growth rate (CAGR) of 3.99%.
VCIT’s CAGR is 1.85 percentage points higher than that of EFV and as a result, would have yielded $3,741 more on a $10,000 investment. Thus, VCIT outperformed EFV by 1.85% annually.
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