VEA vs. BIV: What’s The Difference?

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VEA and BIV? And which fund is better?

VEA and BIV have the same expense ratio: 0.05%. VEA also has a high exposure to the financial services sector while BIV is mostly comprised of AAA bonds. Overall, VEA has provided higher returns than BIV over the past ten years.

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

Summary

VEA BIV
Name Vanguard FTSE Developed Markets Index Fund ETF Shares Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Foreign Large Blend Intermediate-Term Bond
Issuer Vanguard Vanguard
AUM 157.48B 39.05B
Avg. Return 7.05% 5.31%
Div. Yield 2.49% 2.06%
Expense Ratio 0.05% 0.05%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% with an expense ratio of 0.05%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

VEA’s dividend yield is 0.43% higher than that of BIV (2.49% vs. 2.06%). Also, VEA yielded on average 1.74% more per year over the past decade (7.05% vs. 5.31%). VEA and BIV have the same expense ratio: 0.05%.

Fund Composition

Holdings

VEA - Holdings

VEA Holdings Weight
Nestle SA 1.5%
Samsung Electronics Co Ltd 1.4%
ASML Holding NV 1.16%
Roche Holding AG 1.1%
Toyota Motor Corp 0.92%
LVMH Moet Hennessy Louis Vuitton SE 0.84%
Novartis AG 0.82%
Shopify Inc A 0.7%
AstraZeneca PLC 0.67%
SAP SE 0.66%

VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.

LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

Performance

Annual Returns

VEA vs. BIV - Annual Returns

Year VEA BIV
2020 10.29% 9.71%
2019 22.08% 10.19%
2018 -14.47% -0.09%
2017 26.44% 3.8%
2016 2.51% 2.86%
2015 -0.21% 1.23%
2014 -5.71% 7.0%
2013 22.12% -3.44%
2012 18.6% 7.02%
2011 -12.57% 10.62%
2010 8.47% 9.55%

VEA had its best year in 2017 with an annual return of 26.44%. VEA’s worst year over the past decade yielded -14.47% and occurred in 2018. In most years the Vanguard FTSE Developed Markets Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.51%, 8.47%, and 10.29% respectively.

The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

VEA vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $19,290 7.05%
BIV $10,000 $17,492 5.31%

A $10,000 investment in VEA would have resulted in a final balance of $19,290. This is a profit of $9,290 over 11 years and amounts to a compound annual growth rate (CAGR) of 7.05%.

With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.

VEA’s CAGR is 1.74 percentage points higher than that of BIV and as a result, would have yielded $1,798 more on a $10,000 investment. Thus, VEA outperformed BIV by 1.74% annually.


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