VEU vs. IWB: What’s The Difference?

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and IWB is a iShares Large Blend fund. So, what’s the difference between VEU and IWB? And which fund is better?

The expense ratio of VEU is 0.07 percentage points lower than IWB’s (0.08% vs. 0.15%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than IWB over the past ten years.

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

Summary

VEU IWB
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares iShares Russell 1000 ETF
Category Foreign Large Blend Large Blend
Issuer Vanguard iShares
AUM 53.64B 30.54B
Avg. Return 6.64% 14.64%
Div. Yield 2.31% 1.14%
Expense Ratio 0.08% 0.15%

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 Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

VEU’s dividend yield is 1.17% higher than that of IWB (2.31% vs. 1.14%). Also, VEU yielded on average 8.00% less per year over the past decade (6.64% vs. 14.64%). The expense ratio of VEU is 0.07 percentage points lower than IWB’s (0.08% vs. 0.15%).

Fund Composition

Industry Exposure

VEU vs. IWB - Industry Exposure

VEU IWB
Technology 12.94% 25.33%
Industrials 12.19% 8.88%
Energy 4.69% 2.44%
Communication Services 7.44% 10.83%
Utilities 2.89% 2.36%
Healthcare 9.34% 13.35%
Consumer Defensive 8.28% 5.97%
Real Estate 3.04% 3.34%
Financial Services 18.46% 13.64%
Consumer Cyclical 12.57% 11.85%
Basic Materials 8.17% 2.02%

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 Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

VEU is 4.82% more exposed to the Financial Services sector than IWB (18.46% vs 13.64%). VEU’s exposure to Technology and Consumer Cyclical stocks is 12.39% lower and 0.72% higher respectively (12.94% vs. 25.33% and 12.57% vs. 11.85%). In total, Real Estate, Energy, and Communication Services also make up 1.44% less of the fund’s holdings compared to IWB (15.17% vs. 16.61%).

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%.

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

Risk Analysis

VEU IWB
Mean Return 0.56 1.27
R-squared 98.44 99.73
Std. Deviation 15.08 13.87
Alpha 0.28 -0.38
Beta 0.99 1.02
Sharpe Ratio 0.4 1.05
Treynor Ratio 5.12 14.31

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

The iShares Russell 1000 ETF (IWB) has a Sharpe Ratio of 1.05 with a Alpha of -0.38 and a Standard Deviation of 13.87. Its Treynor Ratio is 14.31 while IWB’s Mean Return is 1.27. Furthermore, the fund has a Beta of 1.02 and a R-squared of 99.73.

VEU’s Mean Return is 0.71 points lower than that of IWB and its R-squared is 1.29 points lower. With a Standard Deviation of 15.08, VEU is slightly more volatile than IWB. The Alpha and Beta of VEU are 0.66 points higher and 0.03 points lower than IWB’s Alpha and Beta.

Performance

Annual Returns

VEU vs. IWB - Annual Returns

Year VEU IWB
2020 11.39% 20.8%
2019 21.63% 31.26%
2018 -13.97% -4.91%
2017 27.27% 21.53%
2016 4.77% 11.91%
2015 -4.67% 0.82%
2014 -4.05% 13.08%
2013 14.5% 32.93%
2012 18.55% 16.27%
2011 -14.25% 1.36%
2010 11.85% 15.94%

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 IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% respectively.

Portfolio Growth

VEU vs. IWB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
IWB $10,000 $42,462 14.64%

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 IWB, the end total would have been $42,462. This equates to a $32,462 profit over 11 years and a compound annual growth rate (CAGR) of 14.64%.

VEU’s CAGR is 8.00 percentage points lower than that of IWB and as a result, would have yielded $23,955 less on a $10,000 investment. Thus, VEU performed worse than IWB by 8.00% annually.


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