VEU vs. IWS: What’s The Difference?

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

The expense ratio of VEU is 0.15 percentage points lower than IWS’s (0.08% vs. 0.23%). VEU also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than IWS over the past ten years.

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

Summary

VEU IWS
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares iShares Russell Mid-Cap Value ETF
Category Foreign Large Blend Mid-Cap Value
Issuer Vanguard iShares
AUM 53.64B 14.24B
Avg. Return 6.64% 12.35%
Div. Yield 2.31% 1.34%
Expense Ratio 0.08% 0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

VEU’s dividend yield is 0.97% higher than that of IWS (2.31% vs. 1.34%). Also, VEU yielded on average 5.71% less per year over the past decade (6.64% vs. 12.35%). The expense ratio of VEU is 0.15 percentage points lower than IWS’s (0.08% vs. 0.23%).

Fund Composition

Industry Exposure

VEU vs. IWS - Industry Exposure

VEU IWS
Technology 12.94% 11.39%
Industrials 12.19% 14.6%
Energy 4.69% 4.71%
Communication Services 7.44% 4.08%
Utilities 2.89% 6.97%
Healthcare 9.34% 8.56%
Consumer Defensive 8.28% 4.76%
Real Estate 3.04% 11.71%
Financial Services 18.46% 15.75%
Consumer Cyclical 12.57% 12.07%
Basic Materials 8.17% 5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

VEU is 2.71% more exposed to the Financial Services sector than IWS (18.46% vs 15.75%). VEU’s exposure to Technology and Consumer Cyclical stocks is 1.55% higher and 0.50% higher respectively (12.94% vs. 11.39% and 12.57% vs. 12.07%). In total, Real Estate, Energy, and Communication Services also make up 5.33% less of the fund’s holdings compared to IWS (15.17% vs. 20.50%).

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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

VEU IWS
Mean Return 0.56 1.06
R-squared 98.44 87.04
Std. Deviation 15.08 16.03
Alpha 0.28 -4.11
Beta 0.99 1.1
Sharpe Ratio 0.4 0.75
Treynor Ratio 5.12 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Mean Return of 1.06 with a Standard Deviation of 16.03 and a R-squared of 87.04. Its Sharpe Ratio is 0.75 while IWS’s Beta is 1.1. Furthermore, the fund has a Alpha of -4.11 and a Treynor Ratio of 10.3.

VEU’s Mean Return is 0.50 points lower than that of IWS and its R-squared is 11.40 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than IWS. The Alpha and Beta of VEU are 4.39 points higher and 0.11 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

VEU vs. IWS - Annual Returns

Year VEU IWS
2020 11.39% 4.76%
2019 21.63% 26.78%
2018 -13.97% -12.36%
2017 27.27% 13.1%
2016 4.77% 19.69%
2015 -4.67% -4.93%
2014 -4.05% 14.49%
2013 14.5% 33.11%
2012 18.55% 18.27%
2011 -14.25% -1.55%
2010 11.85% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

VEU vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
IWS $10,000 $33,083 12.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

VEU’s CAGR is 5.71 percentage points lower than that of IWS and as a result, would have yielded $14,576 less on a $10,000 investment. Thus, VEU performed worse than IWS by 5.71% annually.


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