The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and IAU is a iShares N/A fund. So, what’s the difference between VEA and IAU? And which fund is better?
The expense ratio of VEA is 0.20 percentage points lower than IAU’s (0.05% vs. 0.25%). VEA also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEA has provided higher returns than IAU over the past ten years.
In this article, we’ll compare VEA vs. IAU. We’ll look at industry exposure and holdings, as well as at their fund composition and annual returns. Moreover, I’ll also discuss VEA’s and IAU’s portfolio growth, performance, and risk metrics and examine how these affect their overall returns.
Summary
| VEA | IAU | |
| Name | Vanguard FTSE Developed Markets Index Fund ETF Shares | iShares Gold Trust |
| Category | Foreign Large Blend | N/A |
| Issuer | Vanguard | iShares |
| AUM | 157.48B | 28.61B |
| Avg. Return | 7.05% | 6.03% |
| Div. Yield | 2.49% | 0.0% |
| Expense Ratio | 0.05% | 0.25% |
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
VEA’s dividend yield is 2.49% higher than that of IAU (2.49% vs. 0.0%). Also, VEA yielded on average 1.02% more per year over the past decade (7.05% vs. 6.03%). The expense ratio of VEA is 0.20 percentage points lower than IAU’s (0.05% vs. 0.25%).
Fund Composition
Industry Exposure
| VEA | IAU | |
| Technology | 11.67% | 0.0% |
| Industrials | 15.47% | 0.0% |
| Energy | 4.17% | 0.0% |
| Communication Services | 5.41% | 0.0% |
| Utilities | 3.1% | 0.0% |
| Healthcare | 10.6% | 0.0% |
| Consumer Defensive | 8.61% | 0.0% |
| Real Estate | 4.04% | 0.0% |
| Financial Services | 17.39% | 0.0% |
| Consumer Cyclical | 11.31% | 0.0% |
| Basic Materials | 8.24% | 0.0% |
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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VEA is 17.39% more exposed to the Financial Services sector than IAU (17.39% vs 0.0%). VEA’s exposure to Industrials and Technology stocks is 15.47% higher and 11.67% higher respectively (15.47% vs. 0.0% and 11.67% vs. 0.0%). In total, Real Estate, Energy, and Communication Services also make up 13.62% more of the fund’s holdings compared to IAU (13.62% vs. 0.00%).
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%.
| IAU Holdings | Weight |
| Gold | 100.0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
Performance
Annual Returns
| Year | VEA | IAU |
| 2020 | 10.29% | 23.86% |
| 2019 | 22.08% | 18.54% |
| 2018 | -14.47% | -1.39% |
| 2017 | 26.44% | 11.58% |
| 2016 | 2.51% | 8.85% |
| 2015 | -0.21% | -11.65% |
| 2014 | -5.71% | -0.44% |
| 2013 | 22.12% | -27.96% |
| 2012 | 18.6% | 8.37% |
| 2011 | -12.57% | 8.66% |
| 2010 | 8.47% | 27.93% |
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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEA | $10,000 | $19,290 | 7.05% |
| IAU | $10,000 | $16,786 | 6.03% |
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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
VEA’s CAGR is 1.02 percentage points higher than that of IAU and as a result, would have yielded $2,504 more on a $10,000 investment. Thus, VEA outperformed IAU by 1.02% annually.
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