The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between VEA and EFV? And which fund is better?
The expense ratio of VEA is 0.34 percentage points lower than EFV’s (0.05% vs. 0.39%). VEA also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VEA has provided higher returns than EFV over the past ten years.
In this article, we’ll compare VEA vs. EFV. We’ll look at industry exposure and fund composition, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss VEA’s and EFV’s performance, risk metrics, and annual returns and examine how these affect their overall returns.
Summary
| VEA | EFV | |
| Name | Vanguard FTSE Developed Markets Index Fund ETF Shares | iShares MSCI EAFE Value ETF |
| Category | Foreign Large Blend | Foreign Large Value |
| Issuer | Vanguard | iShares |
| AUM | 157.48B | 14.37B |
| Avg. Return | 7.05% | 3.99% |
| Div. Yield | 2.49% | 2.94% |
| Expense Ratio | 0.05% | 0.39% |
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 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%.
VEA’s dividend yield is 0.45% lower than that of EFV (2.49% vs. 2.94%). Also, VEA yielded on average 3.06% more per year over the past decade (7.05% vs. 3.99%). The expense ratio of VEA is 0.34 percentage points lower than EFV’s (0.05% vs. 0.39%).
Fund Composition
Industry Exposure
| VEA | EFV | |
| Technology | 11.67% | 2.98% |
| Industrials | 15.47% | 11.6% |
| Energy | 4.17% | 6.6% |
| Communication Services | 5.41% | 6.46% |
| Utilities | 3.1% | 6.14% |
| Healthcare | 10.6% | 9.19% |
| Consumer Defensive | 8.61% | 6.82% |
| Real Estate | 4.04% | 5.06% |
| Financial Services | 17.39% | 26.55% |
| Consumer Cyclical | 11.31% | 9.0% |
| Basic Materials | 8.24% | 9.59% |
The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) has the most exposure to the Financial Services sector at 17.39%. This is followed by Industrials and Technology at 15.47% and 11.67% respectively. Real Estate (4.04%), Energy (4.17%), and Communication Services (5.41%) only make up 13.62% of the fund’s total assets.
VEA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Consumer Cyclical, and Technology stocks at 8.24%, 8.61%, 10.6%, 11.31%, and 11.67%.
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%.
VEA is 9.16% less exposed to the Financial Services sector than EFV (17.39% vs 26.55%). VEA’s exposure to Industrials and Technology stocks is 3.87% higher and 8.69% higher respectively (15.47% vs. 11.6% and 11.67% vs. 2.98%). In total, Real Estate, Energy, and Communication Services also make up 4.50% less of the fund’s holdings compared to EFV (13.62% vs. 18.12%).
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%.
| 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%.
Performance
Annual Returns
| Year | VEA | EFV |
| 2020 | 10.29% | -2.78% |
| 2019 | 22.08% | 15.97% |
| 2018 | -14.47% | -14.88% |
| 2017 | 26.44% | 21.22% |
| 2016 | 2.51% | 4.87% |
| 2015 | -0.21% | -5.89% |
| 2014 | -5.71% | -5.65% |
| 2013 | 22.12% | 22.61% |
| 2012 | 18.6% | 17.52% |
| 2011 | -12.57% | -12.24% |
| 2010 | 8.47% | 3.18% |
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 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 |
| VEA | $10,000 | $19,290 | 7.05% |
| EFV | $10,000 | $14,134 | 3.99% |
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 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%.
VEA’s CAGR is 3.06 percentage points higher than that of EFV and as a result, would have yielded $5,156 more on a $10,000 investment. Thus, VEA outperformed EFV by 3.06% annually.
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