The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and IVW is a iShares Large Growth fund. So, what’s the difference between VEA and IVW? And which fund is better?
The expense ratio of VEA is 0.13 percentage points lower than IVW’s (0.05% vs. 0.18%). VEA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEA has provided lower returns than IVW over the past ten years.
In this article, we’ll compare VEA vs. IVW. We’ll look at annual returns and risk metrics, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VEA’s and IVW’s performance, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| VEA | IVW | |
| Name | Vanguard FTSE Developed Markets Index Fund ETF Shares | iShares S&P 500 Growth ETF |
| Category | Foreign Large Blend | Large Growth |
| Issuer | Vanguard | iShares |
| AUM | 157.48B | 35.72B |
| Avg. Return | 7.05% | 16.74% |
| Div. Yield | 2.49% | 0.61% |
| Expense Ratio | 0.05% | 0.18% |
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 S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.
VEA’s dividend yield is 1.88% higher than that of IVW (2.49% vs. 0.61%). Also, VEA yielded on average 9.69% less per year over the past decade (7.05% vs. 16.74%). The expense ratio of VEA is 0.13 percentage points lower than IVW’s (0.05% vs. 0.18%).
Fund Composition
Industry Exposure
| VEA | IVW | |
| Technology | 11.67% | 37.8% |
| Industrials | 15.47% | 5.72% |
| Energy | 4.17% | 0.06% |
| Communication Services | 5.41% | 15.44% |
| Utilities | 3.1% | 0.47% |
| Healthcare | 10.6% | 11.88% |
| Consumer Defensive | 8.61% | 3.84% |
| Real Estate | 4.04% | 1.11% |
| Financial Services | 17.39% | 6.78% |
| Consumer Cyclical | 11.31% | 15.25% |
| Basic Materials | 8.24% | 1.65% |
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 S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.
IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.
VEA is 10.61% more exposed to the Financial Services sector than IVW (17.39% vs 6.78%). VEA’s exposure to Industrials and Technology stocks is 9.75% higher and 26.13% lower respectively (15.47% vs. 5.72% and 11.67% vs. 37.8%). In total, Real Estate, Energy, and Communication Services also make up 2.99% less of the fund’s holdings compared to IVW (13.62% vs. 16.61%).
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%.
| IVW Holdings | Weight |
| Apple Inc | 11.46% |
| Microsoft Corp | 10.75% |
| Amazon.com Inc | 7.14% |
| Facebook Inc Class A | 4.28% |
| Alphabet Inc Class A | 4.06% |
| Alphabet Inc Class C | 3.86% |
| Tesla Inc | 2.65% |
| NVIDIA Corp | 2.43% |
| PayPal Holdings Inc | 1.62% |
| Adobe Inc | 1.49% |
IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.
Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.
Performance
Annual Returns
| Year | VEA | IVW |
| 2020 | 10.29% | 33.21% |
| 2019 | 22.08% | 30.91% |
| 2018 | -14.47% | -0.17% |
| 2017 | 26.44% | 27.2% |
| 2016 | 2.51% | 6.74% |
| 2015 | -0.21% | 5.33% |
| 2014 | -5.71% | 14.67% |
| 2013 | 22.12% | 32.48% |
| 2012 | 18.6% | 14.39% |
| 2011 | -12.57% | 4.49% |
| 2010 | 8.47% | 14.84% |
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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEA | $10,000 | $19,290 | 7.05% |
| IVW | $10,000 | $51,915 | 16.74% |
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 IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.
VEA’s CAGR is 9.69 percentage points lower than that of IVW and as a result, would have yielded $32,625 less on a $10,000 investment. Thus, VEA performed worse than IVW by 9.69% annually.
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