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VEU vs. SDY: What’s The Difference?

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

The expense ratio of VEU is 0.27 percentage points lower than SDY’s (0.08% vs. 0.35%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than SDY over the past ten years.

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

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Summary

VEUSDY
NameVanguard FTSE All-World ex-US Index Fund ETF SharesSPDR S&P Dividend ETF
CategoryForeign Large BlendLarge Value
IssuerVanguardSPDR State Street Global Advisors
AUM53.64B19.67B
Avg. Return6.64%12.44%
Div. Yield2.31%2.65%
Expense Ratio0.08%0.35%

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 Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

VEU’s dividend yield is 0.34% lower than that of SDY (2.31% vs. 2.65%). Also, VEU yielded on average 5.80% less per year over the past decade (6.64% vs. 12.44%). The expense ratio of VEU is 0.27 percentage points lower than SDY’s (0.08% vs. 0.35%).

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Fund Composition

Industry Exposure

VEU vs. SDY - Industry Exposure

VEUSDY
Technology12.94%2.0%
Industrials12.19%15.89%
Energy4.69%5.95%
Communication Services7.44%4.64%
Utilities2.89%12.14%
Healthcare9.34%7.35%
Consumer Defensive8.28%14.01%
Real Estate3.04%6.57%
Financial Services18.46%16.32%
Consumer Cyclical12.57%8.68%
Basic Materials8.17%6.45%

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 Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

VEU is 2.14% more exposed to the Financial Services sector than SDY (18.46% vs 16.32%). VEU’s exposure to Technology and Consumer Cyclical stocks is 10.94% higher and 3.89% higher respectively (12.94% vs. 2.0% and 12.57% vs. 8.68%). In total, Real Estate, Energy, and Communication Services also make up 1.99% less of the fund’s holdings compared to SDY (15.17% vs. 17.16%).

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%.

SDY - Holdings

SDY HoldingsWeight
Exxon Mobil Corp2.81%
AT&T Inc2.5%
South Jersey Industries Inc2.22%
Chevron Corp2.02%
International Business Machines Corp2.0%
AbbVie Inc1.93%
National Retail Properties Inc1.86%
Federal Realty Investment Trust1.77%
Realty Income Corp1.7%
Old Republic International Corp1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

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Risk Analysis

VEUSDY
Mean Return0.561.07
R-squared98.4483.62
Std. Deviation15.0812.9
Alpha0.28-0.1
Beta0.990.87
Sharpe Ratio0.40.95
Treynor Ratio5.1213.94

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

The SPDR S&P Dividend ETF (SDY) has a Mean Return of 1.07 with a Standard Deviation of 12.9 and a R-squared of 83.62. Its Alpha is -0.1 while SDY’s Beta is 0.87. Furthermore, the fund has a Sharpe Ratio of 0.95 and a Treynor Ratio of 13.94.

VEU’s Mean Return is 0.51 points lower than that of SDY and its R-squared is 14.82 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than SDY. The Alpha and Beta of VEU are 0.38 points higher and 0.12 points higher than SDY’s Alpha and Beta.

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Performance

Annual Returns

VEU vs. SDY - Annual Returns

YearVEUSDY
202011.39%1.78%
201921.63%23.37%
2018-13.97%-2.73%
201727.27%15.84%
20164.77%20.17%
2015-4.67%-0.7%
2014-4.05%13.8%
201314.5%30.09%
201218.55%11.51%
2011-14.25%7.28%
201011.85%16.41%

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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

VEU vs. SDY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VEU$10,000$18,5076.64%
SDY$10,000$34,80612.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

VEU’s CAGR is 5.80 percentage points lower than that of SDY and as a result, would have yielded $16,299 less on a $10,000 investment. Thus, VEU performed worse than SDY by 5.80% annually.


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