VEA vs. IWF: What’s The Difference?

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

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

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

Summary

VEA IWF
Name Vanguard FTSE Developed Markets Index Fund ETF Shares iShares Russell 1000 Growth ETF
Category Foreign Large Blend Large Growth
Issuer Vanguard iShares
AUM 157.48B 72.16B
Avg. Return 7.05% 17.72%
Div. Yield 2.49% 0.52%
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 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% with an expense ratio of 0.19%.

VEA’s dividend yield is 1.97% higher than that of IWF (2.49% vs. 0.52%). Also, VEA yielded on average 10.67% less per year over the past decade (7.05% vs. 17.72%). The expense ratio of VEA is 0.14 percentage points lower than IWF’s (0.05% vs. 0.19%).

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Fund Composition

Industry Exposure

VEA vs. IWF - Industry Exposure

VEA IWF
Technology 11.67% 39.29%
Industrials 15.47% 6.19%
Energy 4.17% 0.28%
Communication Services 5.41% 12.82%
Utilities 3.1% 0.03%
Healthcare 10.6% 9.23%
Consumer Defensive 8.61% 4.31%
Real Estate 4.04% 1.85%
Financial Services 17.39% 7.36%
Consumer Cyclical 11.31% 17.62%
Basic Materials 8.24% 1.01%

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 Growth ETF (IWF) has the most exposure to the Technology sector at 39.29%. This is followed by Consumer Cyclical and Communication Services at 17.62% and 12.82% respectively. Energy (0.28%), Basic Materials (1.01%), and Real Estate (1.85%) only make up 3.14% of the fund’s total assets.

IWF’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Communication Services stocks at 4.31%, 6.19%, 7.36%, 9.23%, and 12.82%.

VEA is 10.03% more exposed to the Financial Services sector than IWF (17.39% vs 7.36%). VEA’s exposure to Industrials and Technology stocks is 9.28% higher and 27.62% lower respectively (15.47% vs. 6.19% and 11.67% vs. 39.29%). In total, Real Estate, Energy, and Communication Services also make up 1.33% less of the fund’s holdings compared to IWF (13.62% vs. 14.95%).

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%.

IWF - Holdings

IWF Holdings Weight
Apple Inc 10.51%
Microsoft Corp 9.85%
Amazon.com Inc 6.63%
Facebook Inc Class A 3.91%
Alphabet Inc Class A 3.2%
Alphabet Inc Class C 3.03%
Tesla Inc 2.45%
NVIDIA Corp 2.14%
Visa Inc Class A 1.91%
The Home Depot Inc 1.62%

IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.

Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.

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Performance

Annual Returns

VEA vs. IWF - Annual Returns

Year VEA IWF
2020 10.29% 38.21%
2019 22.08% 36.08%
2018 -14.47% -1.68%
2017 26.44% 29.96%
2016 2.51% 6.92%
2015 -0.21% 5.48%
2014 -5.71% 12.84%
2013 22.12% 33.19%
2012 18.6% 15.03%
2011 -12.57% 2.47%
2010 8.47% 16.47%

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 IWF, returning 38.21% on an annual basis. The poorest year for IWF in the last ten years was 2018, with a yield of -1.68%. Most years the iShares Russell 1000 Growth ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.84%, 15.03%, and 16.47% respectively.

Portfolio Growth

VEA vs. IWF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $19,290 7.05%
IWF $10,000 $55,920 17.72%

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 IWF, the end total would have been $55,920. This equates to a $45,920 profit over 11 years and a compound annual growth rate (CAGR) of 17.72%.

VEA’s CAGR is 10.67 percentage points lower than that of IWF and as a result, would have yielded $36,630 less on a $10,000 investment. Thus, VEA performed worse than IWF by 10.67% annually.


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