The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the Vanguard Total International Stock Index Fund ETF Shares (VXUS) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and VXUS is a Vanguard Foreign Large Blend fund. So, what’s the difference between VEA and VXUS? And which fund is better?
The expense ratio of VEA is 0.03 percentage points lower than VXUS’s (0.05% vs. 0.08%). VEA also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VEA has provided lower returns than VXUS over the past ten years.
In this article, we’ll compare VEA vs. VXUS. We’ll look at fund composition and industry exposure, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss VEA’s and VXUS’s portfolio growth, holdings, and performance and examine how these affect their overall returns.
|Name||Vanguard FTSE Developed Markets Index Fund ETF Shares||Vanguard Total International Stock Index Fund ETF Shares|
|Category||Foreign Large Blend||Foreign Large Blend|
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 International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
VEA’s dividend yield is 0.05% higher than that of VXUS (2.49% vs. 2.44%). Also, VEA yielded on average 1.36% less per year over the past decade (7.05% vs. 8.41%). The expense ratio of VEA is 0.03 percentage points lower than VXUS’s (0.05% vs. 0.08%).
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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 Total International Stock Index Fund ETF Shares (VXUS) has the most exposure to the Financial Services sector at 17.64%. This is followed by Technology and Industrials at 13.07% and 12.94% respectively. Real Estate (3.79%), Energy (4.55%), and Communication Services (7.06%) only make up 15.40% of the fund’s total assets.
VXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 7.83%, 8.37%, 9.19%, 12.64%, and 12.94%.
VEA is 0.25% less exposed to the Financial Services sector than VXUS (17.39% vs 17.64%). VEA’s exposure to Industrials and Technology stocks is 2.53% higher and 1.40% lower respectively (15.47% vs. 12.94% and 11.67% vs. 13.07%). In total, Real Estate, Energy, and Communication Services also make up 1.78% less of the fund’s holdings compared to VXUS (13.62% vs. 15.40%).
|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%.
|Taiwan Semiconductor Manufacturing Co Ltd||1.62%|
|Tencent Holdings Ltd||1.41%|
|Alibaba Group Holding Ltd Ordinary Shares||1.26%|
|Samsung Electronics Co Ltd||1.05%|
|ASML Holding NV||0.86%|
|Roche Holding AG||0.81%|
|Toyota Motor Corp||0.67%|
|LVMH Moet Hennessy Louis Vuitton SE||0.61%|
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
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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 2017 was the strongest year for VXUS, returning 27.52% on an annual basis. The poorest year for VXUS in the last ten years was 2018, with a yield of -14.42%. Most years the Vanguard Total International Stock Index Fund ETF Shares has given investors modest returns, such as in 2010, 2016, and 2020, when gains were 0.0%, 4.72%, and 11.32% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VEA would have resulted in a final balance of $20,341. This is a profit of $10,341 over 9 years and amounts to a compound annual growth rate (CAGR) of 7.05%.
With a $10,000 investment in VXUS, the end total would have been $19,315. This equates to a $9,315 profit over 9 years and a compound annual growth rate (CAGR) of 8.41%.
VEA’s CAGR is 1.36 percentage points lower than that of VXUS and as a result, would have yielded $1,026 more on a $10,000 investment. Thus, VEA performed worse than VXUS by 1.36% annually.
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