VEA vs. VT: What’s The Difference?

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and VT is a Vanguard N/A fund. So, what’s the difference between VEA and VT? And which fund is better?

The expense ratio of VEA is 0.03 percentage points lower than VT’s (0.05% vs. 0.08%). VEA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEA has provided lower returns than VT over the past ten years.

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

Summary

VEA VT
Name Vanguard FTSE Developed Markets Index Fund ETF Shares Vanguard Total World Stock Index Fund ETF Shares
Category Foreign Large Blend N/A
Issuer Vanguard Vanguard
AUM 157.48B 30.44B
Avg. Return 7.05% 10.42%
Div. Yield 2.49% 1.65%
Expense Ratio 0.05% 0.08%

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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

VEA’s dividend yield is 0.84% higher than that of VT (2.49% vs. 1.65%). Also, VEA yielded on average 3.37% less per year over the past decade (7.05% vs. 10.42%). The expense ratio of VEA is 0.03 percentage points lower than VT’s (0.05% vs. 0.08%).

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Fund Composition

Industry Exposure

VEA vs. VT - Industry Exposure

VEA VT
Technology 11.67% 19.63%
Industrials 15.47% 10.7%
Energy 4.17% 3.48%
Communication Services 5.41% 9.02%
Utilities 3.1% 2.6%
Healthcare 10.6% 11.58%
Consumer Defensive 8.61% 6.71%
Real Estate 4.04% 3.64%
Financial Services 17.39% 15.36%
Consumer Cyclical 11.31% 12.32%
Basic Materials 8.24% 4.97%

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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

VEA is 2.03% more exposed to the Financial Services sector than VT (17.39% vs 15.36%). VEA’s exposure to Industrials and Technology stocks is 4.77% higher and 7.96% lower respectively (15.47% vs. 10.7% and 11.67% vs. 19.63%). In total, Real Estate, Energy, and Communication Services also make up 2.52% less of the fund’s holdings compared to VT (13.62% vs. 16.14%).

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%.

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

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Performance

Annual Returns

VEA vs. VT - Annual Returns

Year VEA VT
2020 10.29% 16.74%
2019 22.08% 26.8%
2018 -14.47% -9.67%
2017 26.44% 24.19%
2016 2.51% 8.77%
2015 -0.21% -1.88%
2014 -5.71% 3.97%
2013 22.12% 22.98%
2012 18.6% 17.33%
2011 -12.57% -7.71%
2010 8.47% 13.05%

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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

VEA vs. VT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $19,290 7.05%
VT $10,000 $27,739 10.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

VEA’s CAGR is 3.37 percentage points lower than that of VT and as a result, would have yielded $8,449 less on a $10,000 investment. Thus, VEA performed worse than VT by 3.37% annually.


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