VEA vs. IWD: What’s The Difference?

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the iShares Russell 1000 Value ETF (IWD) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and IWD is a iShares Large Value fund. So, what’s the difference between VEA and IWD? And which fund is better?

The expense ratio of VEA is 0.14 percentage points lower than IWD’s (0.05% vs. 0.19%). VEA also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VEA has provided lower returns than IWD over the past ten years.

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

Summary

VEA IWD
Name Vanguard FTSE Developed Markets Index Fund ETF Shares iShares Russell 1000 Value ETF
Category Foreign Large Blend Large Value
Issuer Vanguard iShares
AUM 157.48B 54.1B
Avg. Return 7.05% 11.40%
Div. Yield 2.49% 1.57%
Expense Ratio 0.05% 0.19%

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 Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.

VEA’s dividend yield is 0.92% higher than that of IWD (2.49% vs. 1.57%). Also, VEA yielded on average 4.35% less per year over the past decade (7.05% vs. 11.40%). The expense ratio of VEA is 0.14 percentage points lower than IWD’s (0.05% vs. 0.19%).

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Fund Composition

Industry Exposure

VEA vs. IWD - Industry Exposure

VEA IWD
Technology 11.67% 10.28%
Industrials 15.47% 11.77%
Energy 4.17% 4.76%
Communication Services 5.41% 8.67%
Utilities 3.1% 4.88%
Healthcare 10.6% 17.78%
Consumer Defensive 8.61% 7.76%
Real Estate 4.04% 4.94%
Financial Services 17.39% 20.43%
Consumer Cyclical 11.31% 5.62%
Basic Materials 8.24% 3.1%

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 Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.

IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.

VEA is 3.04% less exposed to the Financial Services sector than IWD (17.39% vs 20.43%). VEA’s exposure to Industrials and Technology stocks is 3.70% higher and 1.39% higher respectively (15.47% vs. 11.77% and 11.67% vs. 10.28%). In total, Real Estate, Energy, and Communication Services also make up 4.75% less of the fund’s holdings compared to IWD (13.62% vs. 18.37%).

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%.

IWD - Holdings

IWD Holdings Weight
Berkshire Hathaway Inc Class B 2.58%
JPMorgan Chase & Co 2.25%
Johnson & Johnson 2.24%
UnitedHealth Group Inc 1.78%
Procter & Gamble Co 1.71%
The Walt Disney Co 1.5%
Bank of America Corp 1.43%
Comcast Corp Class A 1.33%
Exxon Mobil Corp 1.2%
Pfizer Inc 1.18%

IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.

The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.

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Performance

Annual Returns

VEA vs. IWD - Annual Returns

Year VEA IWD
2020 10.29% 2.67%
2019 22.08% 26.34%
2018 -14.47% -8.4%
2017 26.44% 13.47%
2016 2.51% 17.09%
2015 -0.21% -3.95%
2014 -5.71% 13.21%
2013 22.12% 32.18%
2012 18.6% 17.28%
2011 -12.57% 0.21%
2010 8.47% 15.3%

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 IWD, returning 32.18% on an annual basis. The poorest year for IWD in the last ten years was 2018, with a yield of -8.4%. Most years the iShares Russell 1000 Value ETF has given investors modest returns, such as in 2014, 2017, and 2010, when gains were 13.21%, 13.47%, and 15.3% respectively.

Portfolio Growth

VEA vs. IWD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $19,290 7.05%
IWD $10,000 $30,746 11.40%

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 IWD, the end total would have been $30,746. This equates to a $20,746 profit over 11 years and a compound annual growth rate (CAGR) of 11.40%.

VEA’s CAGR is 4.35 percentage points lower than that of IWD and as a result, would have yielded $11,456 less on a $10,000 investment. Thus, VEA performed worse than IWD by 4.35% annually.


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