The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VEU and BIV? And which fund is better?
The expense ratio of VEU is 0.03 percentage points higher than BIV’s (0.08% vs. 0.05%). VEU also has a high exposure to the financial services sector while BIV is mostly comprised of AAA bonds. Overall, VEU has provided higher returns than BIV over the past ten years.
In this article, we’ll compare VEU vs. BIV. We’ll look at industry exposure and fund composition, as well as at their annual returns and holdings. Moreover, I’ll also discuss VEU’s and BIV’s performance, risk metrics, and portfolio growth and examine how these affect their overall returns.
Summary
| VEU | BIV | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Vanguard Intermediate-Term Bond Index Fund ETF Shares |
| Category | Foreign Large Blend | Intermediate-Term Bond |
| Issuer | Vanguard | Vanguard |
| AUM | 53.64B | 39.05B |
| Avg. Return | 6.64% | 5.31% |
| Div. Yield | 2.31% | 2.06% |
| Expense Ratio | 0.08% | 0.05% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
VEU’s dividend yield is 0.25% higher than that of BIV (2.31% vs. 2.06%). Also, VEU yielded on average 1.32% more per year over the past decade (6.64% vs. 5.31%). The expense ratio of VEU is 0.03 percentage points higher than BIV’s (0.08% vs. 0.05%).
Fund Composition
Holdings
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
| BIV Bond Sectors | Weight |
| AAA | 54.51% |
| BBB | 25.24% |
| A | 16.97% |
| AA | 3.1% |
| Others | 0.15% |
| Below B | 0.03% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| VEU | BIV | |
| Mean Return | 0.56 | 0.35 |
| R-squared | 98.44 | 95.12 |
| Std. Deviation | 15.08 | 4.09 |
| Alpha | 0.28 | -0.07 |
| Beta | 0.99 | 1.33 |
| Sharpe Ratio | 0.4 | 0.89 |
| Treynor Ratio | 5.12 | 2.72 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Mean Return of 0.56 with a Alpha of 0.28 and a R-squared of 98.44. Its Treynor Ratio is 5.12 while VEU’s Sharpe Ratio is 0.4. Furthermore, the fund has a Standard Deviation of 15.08 and a Beta of 0.99.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Standard Deviation of 4.09 with a Sharpe Ratio of 0.89 and a Beta of 1.33. Its Alpha is -0.07 while BIV’s R-squared is 95.12. Furthermore, the fund has a Mean Return of 0.35 and a Treynor Ratio of 2.72.
VEU’s Mean Return is 0.21 points higher than that of BIV and its R-squared is 3.32 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than BIV. The Alpha and Beta of VEU are 0.35 points higher and 0.34 points lower than BIV’s Alpha and Beta.
Performance
Annual Returns
| Year | VEU | BIV |
| 2020 | 11.39% | 9.71% |
| 2019 | 21.63% | 10.19% |
| 2018 | -13.97% | -0.09% |
| 2017 | 27.27% | 3.8% |
| 2016 | 4.77% | 2.86% |
| 2015 | -4.67% | 1.23% |
| 2014 | -4.05% | 7.0% |
| 2013 | 14.5% | -3.44% |
| 2012 | 18.55% | 7.02% |
| 2011 | -14.25% | 10.62% |
| 2010 | 11.85% | 9.55% |
VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $18,507 | 6.64% |
| BIV | $10,000 | $17,492 | 5.31% |
A $10,000 investment in VEU would have resulted in a final balance of $18,507. This is a profit of $8,507 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.64%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
VEU’s CAGR is 1.32 percentage points higher than that of BIV and as a result, would have yielded $1,015 more on a $10,000 investment. Thus, VEU outperformed BIV by 1.32% annually.
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