The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between VEU and EFV? And which fund is better?
The expense ratio of VEU is 0.31 percentage points lower than EFV’s (0.08% vs. 0.39%). VEU also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided higher returns than EFV over the past ten years.
In this article, we’ll compare VEU vs. EFV. We’ll look at performance and portfolio growth, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss VEU’s and EFV’s holdings, fund composition, and risk metrics and examine how these affect their overall returns.
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Summary
| VEU | EFV | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | iShares MSCI EAFE Value ETF |
| Category | Foreign Large Blend | Foreign Large Value |
| Issuer | Vanguard | iShares |
| AUM | 53.64B | 14.37B |
| Avg. Return | 6.64% | 3.99% |
| Div. Yield | 2.31% | 2.94% |
| Expense Ratio | 0.08% | 0.39% |
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 iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
VEU’s dividend yield is 0.63% lower than that of EFV (2.31% vs. 2.94%). Also, VEU yielded on average 2.64% more per year over the past decade (6.64% vs. 3.99%). The expense ratio of VEU is 0.31 percentage points lower than EFV’s (0.08% vs. 0.39%).
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Fund Composition
Industry Exposure
| VEU | EFV | |
| Technology | 12.94% | 2.98% |
| Industrials | 12.19% | 11.6% |
| Energy | 4.69% | 6.6% |
| Communication Services | 7.44% | 6.46% |
| Utilities | 2.89% | 6.14% |
| Healthcare | 9.34% | 9.19% |
| Consumer Defensive | 8.28% | 6.82% |
| Real Estate | 3.04% | 5.06% |
| Financial Services | 18.46% | 26.55% |
| Consumer Cyclical | 12.57% | 9.0% |
| Basic Materials | 8.17% | 9.59% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
The iShares MSCI EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.
EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.
VEU is 8.09% less exposed to the Financial Services sector than EFV (18.46% vs 26.55%). VEU’s exposure to Technology and Consumer Cyclical stocks is 9.96% higher and 3.57% higher respectively (12.94% vs. 2.98% and 12.57% vs. 9.0%). In total, Real Estate, Energy, and Communication Services also make up 2.95% less of the fund’s holdings compared to EFV (15.17% vs. 18.12%).
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%.
| EFV Holdings | Weight |
| Novartis AG | 2.41% |
| Toyota Motor Corp | 2.21% |
| Commonwealth Bank of Australia | 1.59% |
| Siemens AG | 1.45% |
| Sanofi SA | 1.42% |
| HSBC Holdings PLC | 1.4% |
| TotalEnergies SE | 1.35% |
| Allianz SE | 1.23% |
| GlaxoSmithKline PLC | 1.18% |
| Rio Tinto PLC | 1.1% |
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
Risk Analysis
| VEU | EFV | |
| Mean Return | 0.56 | 0.42 |
| R-squared | 98.44 | 92.15 |
| Std. Deviation | 15.08 | 16.53 |
| Alpha | 0.28 | -1.77 |
| Beta | 0.99 | 1.05 |
| Sharpe Ratio | 0.4 | 0.26 |
| Treynor Ratio | 5.12 | 2.92 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a R-squared of 98.44 with a Mean Return of 0.56 and a Sharpe Ratio of 0.4. Its Standard Deviation is 15.08 while VEU’s Treynor Ratio is 5.12. Furthermore, the fund has a Beta of 0.99 and a Alpha of 0.28.
The iShares MSCI EAFE Value ETF (EFV) has a Standard Deviation of 16.53 with a Mean Return of 0.42 and a Treynor Ratio of 2.92. Its R-squared is 92.15 while EFV’s Sharpe Ratio is 0.26. Furthermore, the fund has a Alpha of -1.77 and a Beta of 1.05.
VEU’s Mean Return is 0.14 points higher than that of EFV and its R-squared is 6.29 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than EFV. The Alpha and Beta of VEU are 2.05 points higher and 0.06 points lower than EFV’s Alpha and Beta.
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Performance
Annual Returns
| Year | VEU | EFV |
| 2020 | 11.39% | -2.78% |
| 2019 | 21.63% | 15.97% |
| 2018 | -13.97% | -14.88% |
| 2017 | 27.27% | 21.22% |
| 2016 | 4.77% | 4.87% |
| 2015 | -4.67% | -5.89% |
| 2014 | -4.05% | -5.65% |
| 2013 | 14.5% | 22.61% |
| 2012 | 18.55% | 17.52% |
| 2011 | -14.25% | -12.24% |
| 2010 | 11.85% | 3.18% |
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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $18,507 | 6.64% |
| EFV | $10,000 | $14,134 | 3.99% |
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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
VEU’s CAGR is 2.64 percentage points higher than that of EFV and as a result, would have yielded $4,373 more on a $10,000 investment. Thus, VEU outperformed EFV by 2.64% annually.
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