VEU vs. MTUM: What’s The Difference?

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

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

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

Summary

VEU MTUM
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares iShares MSCI USA Momentum Factor ETF
Category Foreign Large Blend Large Growth
Issuer Vanguard iShares
AUM 53.64B 14.53B
Avg. Return 6.64% 17.37%
Div. Yield 2.31% 0.44%
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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

VEU’s dividend yield is 1.87% higher than that of MTUM (2.31% vs. 0.44%). Also, VEU yielded on average 10.73% less per year over the past decade (6.64% vs. 17.37%). The expense ratio of VEU is 0.07 percentage points lower than MTUM’s (0.08% vs. 0.15%).

Fund Composition

Industry Exposure

VEU vs. MTUM - Industry Exposure

VEU MTUM
Technology 12.94% 15.24%
Industrials 12.19% 12.47%
Energy 4.69% 1.77%
Communication Services 7.44% 13.18%
Utilities 2.89% 0.19%
Healthcare 9.34% 6.41%
Consumer Defensive 8.28% 2.88%
Real Estate 3.04% 0.43%
Financial Services 18.46% 34.32%
Consumer Cyclical 12.57% 9.96%
Basic Materials 8.17% 3.15%

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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

VEU is 15.86% less exposed to the Financial Services sector than MTUM (18.46% vs 34.32%). VEU’s exposure to Technology and Consumer Cyclical stocks is 2.30% lower and 2.61% higher respectively (12.94% vs. 15.24% and 12.57% vs. 9.96%). In total, Real Estate, Energy, and Communication Services also make up 0.21% less of the fund’s holdings compared to MTUM (15.17% vs. 15.38%).

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%.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

Risk Analysis

VEU MTUM
Mean Return 0.56 0
R-squared 98.44 0
Std. Deviation 15.08 0
Alpha 0.28 0
Beta 0.99 0
Sharpe Ratio 0.4 0
Treynor Ratio 5.12 0

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

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Sharpe Ratio of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Alpha is 0 while MTUM’s Mean Return is 0. Furthermore, the fund has a Standard Deviation of 0 and a Beta of 0.

VEU’s Mean Return is 0.56 points higher than that of MTUM and its R-squared is 98.44 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than MTUM. The Alpha and Beta of VEU are 0.28 points higher and 0.99 points higher than MTUM’s Alpha and Beta.

Performance

Annual Returns

VEU vs. MTUM - Annual Returns

Year VEU MTUM
2020 11.39% 29.69%
2019 21.63% 27.57%
2018 -13.97% -1.77%
2017 27.27% 37.6%
2016 4.77% 4.89%
2015 -4.67% 9.12%
2014 -4.05% 14.48%
2013 14.5% 0.0%
2012 18.55% 0.0%
2011 -14.25% 0.0%
2010 11.85% 0.0%

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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

VEU vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $14,215 6.64%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in VEU would have resulted in a final balance of $14,215. This is a profit of $4,215 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.64%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

VEU’s CAGR is 10.73 percentage points lower than that of MTUM and as a result, would have yielded $15,086 less on a $10,000 investment. Thus, VEU performed worse than MTUM by 10.73% annually.


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