VEA vs. VHT: What’s The Difference?

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

The expense ratio of VEA is 0.05 percentage points lower than VHT’s (0.05% vs. 0.1%). VEA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEA has provided lower returns than VHT over the past ten years.

In this article, we’ll compare VEA vs. VHT. 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 VHT’s fund composition, portfolio growth, and risk metrics and examine how these affect their overall returns.

Summary

VEA VHT
Name Vanguard FTSE Developed Markets Index Fund ETF Shares Vanguard Health Care Index Fund ETF Shares
Category Foreign Large Blend Health
Issuer Vanguard Vanguard
AUM 157.48B 17.94B
Avg. Return 7.05% 16.04%
Div. Yield 2.49% 1.15%
Expense Ratio 0.05% 0.1%

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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.

VEA’s dividend yield is 1.34% higher than that of VHT (2.49% vs. 1.15%). Also, VEA yielded on average 8.99% less per year over the past decade (7.05% vs. 16.04%). The expense ratio of VEA is 0.05 percentage points lower than VHT’s (0.05% vs. 0.1%).

Fund Composition

Industry Exposure

VEA vs. VHT - Industry Exposure

VEA VHT
Technology 11.67% 0.05%
Industrials 15.47% 0.05%
Energy 4.17% 0.0%
Communication Services 5.41% 0.0%
Utilities 3.1% 0.0%
Healthcare 10.6% 99.57%
Consumer Defensive 8.61% 0.0%
Real Estate 4.04% 0.0%
Financial Services 17.39% 0.02%
Consumer Cyclical 11.31% 0.0%
Basic Materials 8.24% 0.31%

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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.

VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.

VEA is 17.37% more exposed to the Financial Services sector than VHT (17.39% vs 0.02%). VEA’s exposure to Industrials and Technology stocks is 15.42% higher and 11.62% higher respectively (15.47% vs. 0.05% and 11.67% vs. 0.05%). In total, Real Estate, Energy, and Communication Services also make up 13.62% more of the fund’s holdings compared to VHT (13.62% vs. 0.00%).

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%.

VHT - Holdings

VHT Holdings Weight
Johnson & Johnson 7.34%
UnitedHealth Group Inc 6.44%
Pfizer Inc 3.7%
Abbott Laboratories 3.48%
Thermo Fisher Scientific Inc 3.37%
AbbVie Inc 3.37%
Merck & Co Inc 3.33%
Eli Lilly and Co 3.17%
Danaher Corp 2.91%
Medtronic PLC 2.83%

VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.

AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.

Performance

Annual Returns

VEA vs. VHT - Annual Returns

Year VEA VHT
2020 10.29% 18.21%
2019 22.08% 21.97%
2018 -14.47% 5.55%
2017 26.44% 23.34%
2016 2.51% -3.33%
2015 -0.21% 7.22%
2014 -5.71% 25.38%
2013 22.12% 42.67%
2012 18.6% 19.1%
2011 -12.57% 10.57%
2010 8.47% 5.75%

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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.

Portfolio Growth

VEA vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $19,290 7.05%
VHT $10,000 $48,464 16.04%

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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.

VEA’s CAGR is 8.99 percentage points lower than that of VHT and as a result, would have yielded $29,174 less on a $10,000 investment. Thus, VEA performed worse than VHT by 8.99% annually.


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