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VEA vs. IWR: What’s The Difference?

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

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

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

Summary

VEAIWR
NameVanguard FTSE Developed Markets Index Fund ETF SharesiShares Russell Mid-Cap ETF
CategoryForeign Large BlendMid-Cap Blend
IssuerVanguardiShares
AUM157.48B29.84B
Avg. Return7.05%14.15%
Div. Yield2.49%0.99%
Expense Ratio0.05%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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

VEA’s dividend yield is 1.50% higher than that of IWR (2.49% vs. 0.99%). Also, VEA yielded on average 7.10% less per year over the past decade (7.05% vs. 14.15%). The expense ratio of VEA is 0.14 percentage points lower than IWR’s (0.05% vs. 0.19%).

Fund Composition

Industry Exposure

VEA vs. IWR - Industry Exposure

VEAIWR
Technology11.67%19.67%
Industrials15.47%14.54%
Energy4.17%3.48%
Communication Services5.41%4.64%
Utilities3.1%4.46%
Healthcare10.6%11.76%
Consumer Defensive8.61%3.82%
Real Estate4.04%8.31%
Financial Services17.39%11.64%
Consumer Cyclical11.31%13.59%
Basic Materials8.24%4.1%

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 Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

VEA is 5.75% more exposed to the Financial Services sector than IWR (17.39% vs 11.64%). VEA’s exposure to Industrials and Technology stocks is 0.93% higher and 8.00% lower respectively (15.47% vs. 14.54% and 11.67% vs. 19.67%). In total, Real Estate, Energy, and Communication Services also make up 2.81% less of the fund’s holdings compared to IWR (13.62% vs. 16.43%).

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%.

IWR - Holdings

IWR HoldingsWeight
IDEXX Laboratories Inc0.51%
DocuSign Inc0.51%
Twitter Inc0.48%
Chipotle Mexican Grill Inc0.47%
Roku Inc Class A0.44%
Marvell Technology Inc0.44%
DexCom Inc0.44%
Trane Technologies PLC0.43%
MSCI Inc0.43%
Carrier Global Corp Ordinary Shares0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

Performance

Annual Returns

VEA vs. IWR - Annual Returns

YearVEAIWR
202010.29%16.91%
201922.08%30.31%
2018-14.47%-9.13%
201726.44%18.32%
20162.51%13.58%
2015-0.21%-2.57%
2014-5.71%13.03%
201322.12%34.5%
201218.6%17.13%
2011-12.57%-1.67%
20108.47%25.25%

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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.

Portfolio Growth

VEA vs. IWR - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VEA$10,000$19,2907.05%
IWR$10,000$39,75114.15%

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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.

VEA’s CAGR is 7.10 percentage points lower than that of IWR and as a result, would have yielded $20,461 less on a $10,000 investment. Thus, VEA performed worse than IWR by 7.10% annually.


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