VEU vs. IVE: What’s The Difference?

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and IVE is a iShares Large Value fund. So, what’s the difference between VEU and IVE? And which fund is better?

The expense ratio of VEU is 0.10 percentage points lower than IVE’s (0.08% vs. 0.18%). VEU also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than IVE over the past ten years.

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

Summary

VEU IVE
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares iShares S&P 500 Value ETF
Category Foreign Large Blend Large Value
Issuer Vanguard iShares
AUM 53.64B 22.4B
Avg. Return 6.64% 11.68%
Div. Yield 2.31% 1.88%
Expense Ratio 0.08% 0.18%

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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

VEU’s dividend yield is 0.43% higher than that of IVE (2.31% vs. 1.88%). Also, VEU yielded on average 5.05% less per year over the past decade (6.64% vs. 11.68%). The expense ratio of VEU is 0.10 percentage points lower than IVE’s (0.08% vs. 0.18%).

Fund Composition

Industry Exposure

VEU vs. IVE - Industry Exposure

VEU IVE
Technology 12.94% 9.41%
Industrials 12.19% 12.19%
Energy 4.69% 5.43%
Communication Services 7.44% 6.4%
Utilities 2.89% 4.82%
Healthcare 9.34% 15.4%
Consumer Defensive 8.28% 9.23%
Real Estate 3.04% 4.38%
Financial Services 18.46% 22.06%
Consumer Cyclical 12.57% 7.68%
Basic Materials 8.17% 2.99%

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 S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.

IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.

VEU is 3.60% less exposed to the Financial Services sector than IVE (18.46% vs 22.06%). VEU’s exposure to Technology and Consumer Cyclical stocks is 3.53% higher and 4.89% higher respectively (12.94% vs. 9.41% and 12.57% vs. 7.68%). In total, Real Estate, Energy, and Communication Services also make up 1.04% less of the fund’s holdings compared to IVE (15.17% vs. 16.21%).

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%.

IVE - Holdings

IVE Holdings Weight
Berkshire Hathaway Inc Class B 3.05%
JPMorgan Chase & Co 2.65%
The Walt Disney Co 1.85%
Bank of America Corp 1.67%
Johnson & Johnson 1.57%
Exxon Mobil Corp 1.41%
Pfizer Inc 1.38%
Cisco Systems Inc 1.35%
Verizon Communications Inc 1.33%
Intel Corp 1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

Risk Analysis

VEU IVE
Mean Return 0.56 1.05
R-squared 98.44 92.08
Std. Deviation 15.08 14.3
Alpha 0.28 -2.9
Beta 0.99 1.01
Sharpe Ratio 0.4 0.83
Treynor Ratio 5.12 11.41

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Alpha of 0.28 with a Treynor Ratio of 5.12 and a Beta of 0.99. Its R-squared is 98.44 while VEU’s Standard Deviation is 15.08. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Mean Return of 0.56.

The iShares S&P 500 Value ETF (IVE) has a Sharpe Ratio of 0.83 with a R-squared of 92.08 and a Mean Return of 1.05. Its Beta is 1.01 while IVE’s Alpha is -2.9. Furthermore, the fund has a Standard Deviation of 14.3 and a Treynor Ratio of 11.41.

VEU’s Mean Return is 0.49 points lower than that of IVE and its R-squared is 6.36 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than IVE. The Alpha and Beta of VEU are 3.18 points higher and 0.02 points lower than IVE’s Alpha and Beta.

Performance

Annual Returns

VEU vs. IVE - Annual Returns

Year VEU IVE
2020 11.39% 1.24%
2019 21.63% 31.71%
2018 -13.97% -9.09%
2017 27.27% 15.19%
2016 4.77% 17.17%
2015 -4.67% -3.24%
2014 -4.05% 12.14%
2013 14.5% 31.69%
2012 18.55% 17.45%
2011 -14.25% -0.63%
2010 11.85% 14.9%

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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.

Portfolio Growth

VEU vs. IVE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
IVE $10,000 $31,350 11.68%

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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.

VEU’s CAGR is 5.05 percentage points lower than that of IVE and as a result, would have yielded $12,843 less on a $10,000 investment. Thus, VEU performed worse than IVE by 5.05% annually.


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