VEU vs. IUSB: What’s The Difference?

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between VEU and IUSB? And which fund is better?

The expense ratio of VEU is 0.02 percentage points higher than IUSB’s (0.08% vs. 0.06%). VEU also has a high exposure to the financial services sector while IUSB is mostly comprised of AAA bonds. Overall, VEU has provided higher returns than IUSB over the past ten years.

In this article, we’ll compare VEU vs. IUSB. We’ll look at annual returns and risk metrics, as well as at their performance and portfolio growth. Moreover, I’ll also discuss VEU’s and IUSB’s industry exposure, fund composition, and holdings and examine how these affect their overall returns.

Summary

VEU IUSB
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares iShares Core Total USD Bond Market ETF
Category Foreign Large Blend N/A
Issuer Vanguard iShares
AUM 53.64B 14.49B
Avg. Return 6.64% 4.13%
Div. Yield 2.31% 2.1%
Expense Ratio 0.08% 0.06%

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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

VEU’s dividend yield is 0.21% higher than that of IUSB (2.31% vs. 2.1%). Also, VEU yielded on average 2.51% more per year over the past decade (6.64% vs. 4.13%). The expense ratio of VEU is 0.02 percentage points higher than IUSB’s (0.08% vs. 0.06%).

Fund Composition

Holdings

VEU - 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%.

IUSB - Holdings

IUSB Bond Sectors Weight
AAA 58.32%
BBB 16.98%
A 12.27%
BB 4.33%
AA 3.36%
B 2.8%
Others 1.01%
Below B 0.92%
US Government 0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

Risk Analysis

VEU IUSB
Mean Return 0.56 0
R-squared 98.44 0
Std. Deviation 15.08 0
Alpha 0.28 0
Beta 0.99 0
Sharpe Ratio 0.4 0
Treynor Ratio 5.12 0

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 Treynor Ratio of 5.12. Its Sharpe Ratio is 0.4 while VEU’s R-squared is 98.44. Furthermore, the fund has a Beta of 0.99 and a Standard Deviation of 15.08.

The iShares Core Total USD Bond Market ETF (IUSB) has a Sharpe Ratio of 0 with a Alpha of 0 and a Mean Return of 0. Its Beta is 0 while IUSB’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.

VEU’s Mean Return is 0.56 points higher than that of IUSB and its R-squared is 98.44 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than IUSB. The Alpha and Beta of VEU are 0.28 points higher and 0.99 points higher than IUSB’s Alpha and Beta.

Performance

Annual Returns

VEU vs. IUSB - Annual Returns

Year VEU IUSB
2020 11.39% 7.59%
2019 21.63% 9.26%
2018 -13.97% -0.38%
2017 27.27% 4.06%
2016 4.77% 3.78%
2015 -4.67% 0.46%
2014 -4.05% 0.0%
2013 14.5% 0.0%
2012 18.55% 0.0%
2011 -14.25% 0.0%
2010 11.85% 0.0%

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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

VEU vs. IUSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $14,815 6.64%
IUSB $10,000 $12,704 4.13%

A $10,000 investment in VEU would have resulted in a final balance of $14,815. This is a profit of $4,815 over 6 years and amounts to a compound annual growth rate (CAGR) of 6.64%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

VEU’s CAGR is 2.51 percentage points higher than that of IUSB and as a result, would have yielded $2,111 more on a $10,000 investment. Thus, VEU outperformed IUSB by 2.51% annually.


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