The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the Vanguard Value Index Fund ETF Shares (VTV) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and VTV is a Vanguard Large Value fund. So, what’s the difference between VEA and VTV? And which fund is better?
The expense ratio of VEA is 0.01 percentage points higher than VTV’s (0.05% vs. 0.04%). VEA also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VEA has provided lower returns than VTV over the past ten years.
In this article, we’ll compare VEA vs. VTV. We’ll look at performance and industry exposure, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss VEA’s and VTV’s annual returns, fund composition, and holdings and examine how these affect their overall returns.
|Name||Vanguard FTSE Developed Markets Index Fund ETF Shares||Vanguard Value Index Fund ETF Shares|
|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 Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
VEA’s dividend yield is 0.34% higher than that of VTV (2.49% vs. 2.15%). Also, VEA yielded on average 5.02% less per year over the past decade (7.05% vs. 12.07%). The expense ratio of VEA is 0.01 percentage points higher than VTV’s (0.05% vs. 0.04%).
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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 Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.
VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.
VEA is 5.42% less exposed to the Financial Services sector than VTV (17.39% vs 22.81%). VEA’s exposure to Industrials and Technology stocks is 2.86% higher and 3.81% higher respectively (15.47% vs. 12.61% and 11.67% vs. 7.86%). In total, Real Estate, Energy, and Communication Services also make up 0.47% less of the fund’s holdings compared to VTV (13.62% vs. 14.09%).
|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%.
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
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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 VTV, returning 33.03% on an annual basis. The poorest year for VTV in the last ten years was 2018, with a yield of -5.39%. Most years the Vanguard Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.19%, 14.45%, and 15.19% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VTV, the end total would have been $33,163. This equates to a $23,163 profit over 11 years and a compound annual growth rate (CAGR) of 12.07%.
VEA’s CAGR is 5.02 percentage points lower than that of VTV and as a result, would have yielded $13,873 less on a $10,000 investment. Thus, VEA performed worse than VTV by 5.02% annually.
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