VEU vs. MDY: What’s The Difference?

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between VEU and MDY? And which fund is better?

The expense ratio of VEU is 0.15 percentage points lower than MDY’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 MDY over the past ten years.

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

Summary

VEU MDY
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares SPDR S&P MIDCAP 400 ETF Trust
Category Foreign Large Blend Mid-Cap Blend
Issuer Vanguard SPDR State Street Global Advisors
AUM 53.64B 21.31B
Avg. Return 6.64% 13.29%
Div. Yield 2.31% 0.94%
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 SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.

VEU’s dividend yield is 1.37% higher than that of MDY (2.31% vs. 0.94%). Also, VEU yielded on average 6.65% less per year over the past decade (6.64% vs. 13.29%). The expense ratio of VEU is 0.15 percentage points lower than MDY’s (0.08% vs. 0.23%).

Fund Composition

Industry Exposure

VEU vs. MDY - Industry Exposure

VEU MDY
Technology 12.94% 14.74%
Industrials 12.19% 17.88%
Energy 4.69% 2.52%
Communication Services 7.44% 1.63%
Utilities 2.89% 2.84%
Healthcare 9.34% 11.17%
Consumer Defensive 8.28% 4.2%
Real Estate 3.04% 9.66%
Financial Services 18.46% 15.2%
Consumer Cyclical 12.57% 14.89%
Basic Materials 8.17% 5.27%

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 SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.

MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.

VEU is 3.26% more exposed to the Financial Services sector than MDY (18.46% vs 15.2%). VEU’s exposure to Technology and Consumer Cyclical stocks is 1.80% lower and 2.32% lower respectively (12.94% vs. 14.74% and 12.57% vs. 14.89%). In total, Real Estate, Energy, and Communication Services also make up 1.36% more of the fund’s holdings compared to MDY (15.17% vs. 13.81%).

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%.

MDY - Holdings

MDY Holdings Weight
Bio-Techne Corp 0.75%
Molina Healthcare Inc 0.63%
Cognex Corp 0.63%
Fair Isaac Corp 0.62%
XPO Logistics Inc 0.61%
SolarEdge Technologies Inc 0.61%
Signature Bank 0.6%
Graco Inc 0.55%
Camden Property Trust 0.55%
FactSet Research Systems Inc 0.54%

MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.

SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.

Risk Analysis

VEU MDY
Mean Return 0.56 1.08
R-squared 98.44 86.66
Std. Deviation 15.08 16.83
Alpha 0.28 -4.1
Beta 0.99 1.15
Sharpe Ratio 0.4 0.73
Treynor Ratio 5.12 9.97

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

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Sharpe Ratio of 0.73 with a R-squared of 86.66 and a Beta of 1.15. Its Treynor Ratio is 9.97 while MDY’s Mean Return is 1.08. Furthermore, the fund has a Alpha of -4.1 and a Standard Deviation of 16.83.

VEU’s Mean Return is 0.52 points lower than that of MDY and its R-squared is 11.78 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than MDY. The Alpha and Beta of VEU are 4.38 points higher and 0.16 points lower than MDY’s Alpha and Beta.

Performance

Annual Returns

VEU vs. MDY - Annual Returns

Year VEU MDY
2020 11.39% 13.51%
2019 21.63% 25.86%
2018 -13.97% -11.28%
2017 27.27% 15.89%
2016 4.77% 20.33%
2015 -4.67% -2.4%
2014 -4.05% 9.42%
2013 14.5% 33.08%
2012 18.55% 17.58%
2011 -14.25% -1.99%
2010 11.85% 26.17%

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 MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.

Portfolio Growth

VEU vs. MDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
MDY $10,000 $36,524 13.29%

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 MDY, the end total would have been $36,524. This equates to a $26,524 profit over 11 years and a compound annual growth rate (CAGR) of 13.29%.

VEU’s CAGR is 6.65 percentage points lower than that of MDY and as a result, would have yielded $18,017 less on a $10,000 investment. Thus, VEU performed worse than MDY by 6.65% annually.


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