Skip to content

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.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VEUIWB
NameVanguard FTSE All-World ex-US Index Fund ETF SharesiShares Russell 1000 ETF
CategoryForeign Large BlendLarge Blend
IssuerVanguardiShares
AUM53.64B30.54B
Avg. Return6.64%14.64%
Div. Yield2.31%1.14%
Expense Ratio0.08%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%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VEU vs. IWB - Industry Exposure

VEUIWB
Technology12.94%25.33%
Industrials12.19%8.88%
Energy4.69%2.44%
Communication Services7.44%10.83%
Utilities2.89%2.36%
Healthcare9.34%13.35%
Consumer Defensive8.28%5.97%
Real Estate3.04%3.34%
Financial Services18.46%13.64%
Consumer Cyclical12.57%11.85%
Basic Materials8.17%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 HoldingsWeight
Tencent Holdings Ltd1.57%
Alibaba Group Holding Ltd Ordinary Shares1.4%
Nestle SA1.22%
Taiwan Semiconductor Manufacturing Co Ltd0.98%
ASML Holding NV0.95%
Taiwan Semiconductor Manufacturing Co Ltd ADR0.91%
Roche Holding AG0.91%
Toyota Motor Corp0.75%
LVMH Moet Hennessy Louis Vuitton SE0.68%
Novartis AG0.67%

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 HoldingsWeight
Apple Inc5.45%
Microsoft Corp5.11%
Amazon.com Inc3.43%
Facebook Inc Class A2.03%
Alphabet Inc Class A1.93%
Alphabet Inc Class C1.82%
Tesla Inc1.27%
Berkshire Hathaway Inc Class B1.24%
NVIDIA Corp1.11%
JPMorgan Chase & Co1.09%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VEUIWB
Mean Return0.561.27
R-squared98.4499.73
Std. Deviation15.0813.87
Alpha0.28-0.38
Beta0.991.02
Sharpe Ratio0.41.05
Treynor Ratio5.1214.31

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.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VEU vs. IWB - Annual Returns

YearVEUIWB
202011.39%20.8%
201921.63%31.26%
2018-13.97%-4.91%
201727.27%21.53%
20164.77%11.91%
2015-4.67%0.82%
2014-4.05%13.08%
201314.5%32.93%
201218.55%16.27%
2011-14.25%1.36%
201011.85%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

FundInitial BalanceFinal BalanceCAGR
VEU$10,000$18,5076.64%
IWB$10,000$42,46214.64%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.