The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between VEA and IUSB? And which fund is better?

The expense ratio of VEA is 0.01 percentage points lower than IUSB’s (0.05% vs. 0.06%). VEA also has a high exposure to the financial services sector while IUSB is mostly comprised of AAA bonds. Overall, VEA has provided higher returns than IUSB over the past ten years.

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

Summary

VEAIUSB
NameVanguard FTSE Developed Markets Index Fund ETF SharesiShares Core Total USD Bond Market ETF
CategoryForeign Large BlendN/A
IssuerVanguardiShares
AUM157.48B14.49B
Avg. Return7.05%4.13%
Div. Yield2.49%2.1%
Expense Ratio0.05%0.06%

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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

VEA’s dividend yield is 0.39% higher than that of IUSB (2.49% vs. 2.1%). Also, VEA yielded on average 2.92% more per year over the past decade (7.05% vs. 4.13%). The expense ratio of VEA is 0.01 percentage points lower than IUSB’s (0.05% vs. 0.06%).

Fund Composition

Holdings

VEA - Holdings

VEA HoldingsWeight
Nestle SA1.5%
Samsung Electronics Co Ltd1.4%
ASML Holding NV1.16%
Roche Holding AG1.1%
Toyota Motor Corp0.92%
LVMH Moet Hennessy Louis Vuitton SE0.84%
Novartis AG0.82%
Shopify Inc A0.7%
AstraZeneca PLC0.67%
SAP SE0.66%

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%.

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

Performance

Annual Returns

VEA vs. IUSB - Annual Returns

YearVEAIUSB
202010.29%7.59%
201922.08%9.26%
2018-14.47%-0.38%
201726.44%4.06%
20162.51%3.78%
2015-0.21%0.46%
2014-5.71%0.0%
201322.12%0.0%
201218.6%0.0%
2011-12.57%0.0%
20108.47%0.0%

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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

VEA vs. IUSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VEA$10,000$14,8947.05%
IUSB$10,000$12,7044.13%

A $10,000 investment in VEA would have resulted in a final balance of $14,894. This is a profit of $4,894 over 6 years and amounts to a compound annual growth rate (CAGR) of 7.05%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

VEA’s CAGR is 2.92 percentage points higher than that of IUSB and as a result, would have yielded $2,190 more on a $10,000 investment. Thus, VEA outperformed IUSB by 2.92% annually.

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