VEU vs. IWR: What’s The Difference?

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

The expense ratio of VEU is 0.11 percentage points lower than IWR’s (0.08% vs. 0.19%). VEU also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than IWR over the past ten years.

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

Summary

VEU IWR
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares iShares Russell Mid-Cap ETF
Category Foreign Large Blend Mid-Cap Blend
Issuer Vanguard iShares
AUM 53.64B 29.84B
Avg. Return 6.64% 14.15%
Div. Yield 2.31% 0.99%
Expense Ratio 0.08% 0.19%

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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

VEU’s dividend yield is 1.32% higher than that of IWR (2.31% vs. 0.99%). Also, VEU yielded on average 7.51% less per year over the past decade (6.64% vs. 14.15%). The expense ratio of VEU is 0.11 percentage points lower than IWR’s (0.08% vs. 0.19%).

Fund Composition

Industry Exposure

VEU vs. IWR - Industry Exposure

VEU IWR
Technology 12.94% 19.67%
Industrials 12.19% 14.54%
Energy 4.69% 3.48%
Communication Services 7.44% 4.64%
Utilities 2.89% 4.46%
Healthcare 9.34% 11.76%
Consumer Defensive 8.28% 3.82%
Real Estate 3.04% 8.31%
Financial Services 18.46% 11.64%
Consumer Cyclical 12.57% 13.59%
Basic Materials 8.17% 4.1%

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 Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

VEU is 6.82% more exposed to the Financial Services sector than IWR (18.46% vs 11.64%). VEU’s exposure to Technology and Consumer Cyclical stocks is 6.73% lower and 1.02% lower respectively (12.94% vs. 19.67% and 12.57% vs. 13.59%). In total, Real Estate, Energy, and Communication Services also make up 1.26% less of the fund’s holdings compared to IWR (15.17% vs. 16.43%).

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%.

IWR - Holdings

IWR Holdings Weight
IDEXX Laboratories Inc 0.51%
DocuSign Inc 0.51%
Twitter Inc 0.48%
Chipotle Mexican Grill Inc 0.47%
Roku Inc Class A 0.44%
Marvell Technology Inc 0.44%
DexCom Inc 0.44%
Trane Technologies PLC 0.43%
MSCI Inc 0.43%
Carrier Global Corp Ordinary Shares 0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

Risk Analysis

VEU IWR
Mean Return 0.56 1.17
R-squared 98.44 91.52
Std. Deviation 15.08 15.66
Alpha 0.28 -2.8
Beta 0.99 1.11
Sharpe Ratio 0.4 0.86
Treynor Ratio 5.12 11.72

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 Standard Deviation of 15.08. Its R-squared is 98.44 while VEU’s Beta is 0.99. Furthermore, the fund has a Mean Return of 0.56 and a Sharpe Ratio of 0.4.

The iShares Russell Mid-Cap ETF (IWR) has a Mean Return of 1.17 with a Treynor Ratio of 11.72 and a Standard Deviation of 15.66. Its R-squared is 91.52 while IWR’s Sharpe Ratio is 0.86. Furthermore, the fund has a Beta of 1.11 and a Alpha of -2.8.

VEU’s Mean Return is 0.61 points lower than that of IWR and its R-squared is 6.92 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than IWR. The Alpha and Beta of VEU are 3.08 points higher and 0.12 points lower than IWR’s Alpha and Beta.

Performance

Annual Returns

VEU vs. IWR - Annual Returns

Year VEU IWR
2020 11.39% 16.91%
2019 21.63% 30.31%
2018 -13.97% -9.13%
2017 27.27% 18.32%
2016 4.77% 13.58%
2015 -4.67% -2.57%
2014 -4.05% 13.03%
2013 14.5% 34.5%
2012 18.55% 17.13%
2011 -14.25% -1.67%
2010 11.85% 25.25%

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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.

Portfolio Growth

VEU vs. IWR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
IWR $10,000 $39,751 14.15%

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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.

VEU’s CAGR is 7.51 percentage points lower than that of IWR and as a result, would have yielded $21,244 less on a $10,000 investment. Thus, VEU performed worse than IWR by 7.51% annually.


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