The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and VLUE is a iShares Large Value fund. So, what’s the difference between VEA and VLUE? And which fund is better?
The expense ratio of VEA is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%). VEA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEA has provided lower returns than VLUE over the past ten years.
In this article, we’ll compare VEA vs. VLUE. We’ll look at risk metrics and annual returns, as well as at their holdings and fund composition. Moreover, I’ll also discuss VEA’s and VLUE’s performance, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard FTSE Developed Markets Index Fund ETF Shares||iShares MSCI USA Value Factor ETF|
|Category||Foreign Large Blend||Large Value|
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 MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
VEA’s dividend yield is 0.60% higher than that of VLUE (2.49% vs. 1.89%). Also, VEA yielded on average 1.86% less per year over the past decade (7.05% vs. 8.91%). The expense ratio of VEA is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%).
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 MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
VEA is 6.43% more exposed to the Financial Services sector than VLUE (17.39% vs 10.96%). VEA’s exposure to Industrials and Technology stocks is 6.33% higher and 15.22% lower respectively (15.47% vs. 9.14% and 11.67% vs. 26.89%). In total, Real Estate, Energy, and Communication Services also make up 2.38% less of the fund’s holdings compared to VLUE (13.62% vs. 16.00%).
|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%|
|Shopify Inc A||0.7%|
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%.
|General Motors Co||3.19%|
|Micron Technology Inc||3.14%|
|Cisco Systems Inc||3.05%|
|International Business Machines Corp||2.76%|
|Ford Motor Co||2.23%|
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VEA would have resulted in a final balance of $14,044. This is a profit of $4,044 over 7 years and amounts to a compound annual growth rate (CAGR) of 7.05%.
With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.
VEA’s CAGR is 1.86 percentage points lower than that of VLUE and as a result, would have yielded $3,203 less on a $10,000 investment. Thus, VEA performed worse than VLUE by 1.86% annually.
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