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VEA vs. VBR: What’s The Difference?

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

The expense ratio of VEA is 0.02 percentage points lower than VBR’s (0.05% vs. 0.07%). VEA also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VEA has provided lower returns than VBR over the past ten years.

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

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Summary

VEAVBR
NameVanguard FTSE Developed Markets Index Fund ETF SharesVanguard Small-Cap Value Index Fund ETF Shares
CategoryForeign Large BlendSmall Value
IssuerVanguardVanguard
AUM157.48B48.08B
Avg. Return7.05%12.28%
Div. Yield2.49%1.6%
Expense Ratio0.05%0.07%

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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

VEA’s dividend yield is 0.89% higher than that of VBR (2.49% vs. 1.6%). Also, VEA yielded on average 5.23% less per year over the past decade (7.05% vs. 12.28%). The expense ratio of VEA is 0.02 percentage points lower than VBR’s (0.05% vs. 0.07%).

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Fund Composition

Industry Exposure

VEA vs. VBR - Industry Exposure

VEAVBR
Technology11.67%8.39%
Industrials15.47%18.44%
Energy4.17%5.15%
Communication Services5.41%1.77%
Utilities3.1%3.65%
Healthcare10.6%7.16%
Consumer Defensive8.61%4.36%
Real Estate4.04%10.92%
Financial Services17.39%20.04%
Consumer Cyclical11.31%13.82%
Basic Materials8.24%6.31%

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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

VEA is 2.65% less exposed to the Financial Services sector than VBR (17.39% vs 20.04%). VEA’s exposure to Industrials and Technology stocks is 2.97% lower and 3.28% higher respectively (15.47% vs. 18.44% and 11.67% vs. 8.39%). In total, Real Estate, Energy, and Communication Services also make up 4.22% less of the fund’s holdings compared to VBR (13.62% vs. 17.84%).

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%.

VBR - Holdings

VBR HoldingsWeight
Diamondback Energy Inc0.55%
VICI Properties Inc Ordinary Shares0.54%
IDEX Corp0.54%
Nuance Communications Inc0.5%
Molina Healthcare Inc0.48%
Signature Bank0.46%
Novavax Inc0.44%
Howmet Aerospace Inc0.44%
Apollo Global Management Inc Class A0.42%
Brown & Brown Inc0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

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Performance

Annual Returns

VEA vs. VBR - Annual Returns

YearVEAVBR
202010.29%5.82%
201922.08%22.76%
2018-14.47%-12.22%
201726.44%11.79%
20162.51%24.8%
2015-0.21%-4.67%
2014-5.71%10.55%
201322.12%36.57%
201218.6%18.78%
2011-12.57%-4.05%
20108.47%24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

VEA vs. VBR - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VEA$10,000$19,2907.05%
VBR$10,000$32,61112.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

VEA’s CAGR is 5.23 percentage points lower than that of VBR and as a result, would have yielded $13,321 less on a $10,000 investment. Thus, VEA performed worse than VBR by 5.23% annually.


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