The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between VEA and VTIP? And which fund is better?
VEA and VTIP have the same expense ratio: 0.05%. VEA also has a high exposure to the financial services sector while VTIP is mostly comprised of AAA bonds. Overall, VEA has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare VEA vs. VTIP. We’ll look at annual returns and fund composition, as well as at their risk metrics and holdings. Moreover, I’ll also discuss VEA’s and VTIP’s performance, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard FTSE Developed Markets Index Fund ETF Shares||Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares|
|Category||Foreign Large Blend||Inflation-Protected Bond|
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
VEA’s dividend yield is 1.14% higher than that of VTIP (2.49% vs. 1.35%). Also, VEA yielded on average 5.26% more per year over the past decade (7.05% vs. 1.79%). VEA and VTIP have the same expense ratio: 0.05%.
|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%.
|VTIP Bond Sectors||Weight|
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% 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 VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
VEA’s CAGR is 5.26 percentage points higher than that of VTIP and as a result, would have yielded $2,739 more on a $10,000 investment. Thus, VEA outperformed VTIP by 5.26% annually.
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