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.

Summary

VEU SDY
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares SPDR S&P Dividend ETF
Category Foreign Large Blend Large Value
Issuer Vanguard SPDR State Street Global Advisors
AUM 53.64B 19.67B
Avg. Return 6.64% 12.44%
Div. Yield 2.31% 2.65%
Expense Ratio 0.08% 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%).

Fund Composition

Industry Exposure

VEU vs. SDY - Industry Exposure

VEU SDY
Technology 12.94% 2.0%
Industrials 12.19% 15.89%
Energy 4.69% 5.95%
Communication Services 7.44% 4.64%
Utilities 2.89% 12.14%
Healthcare 9.34% 7.35%
Consumer Defensive 8.28% 14.01%
Real Estate 3.04% 6.57%
Financial Services 18.46% 16.32%
Consumer Cyclical 12.57% 8.68%
Basic Materials 8.17% 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 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%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

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%.

Risk Analysis

VEU SDY
Mean Return 0.56 1.07
R-squared 98.44 83.62
Std. Deviation 15.08 12.9
Alpha 0.28 -0.1
Beta 0.99 0.87
Sharpe Ratio 0.4 0.95
Treynor Ratio 5.12 13.94

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.

Performance

Annual Returns

VEU vs. SDY - Annual Returns

Year VEU SDY
2020 11.39% 1.78%
2019 21.63% 23.37%
2018 -13.97% -2.73%
2017 27.27% 15.84%
2016 4.77% 20.17%
2015 -4.67% -0.7%
2014 -4.05% 13.8%
2013 14.5% 30.09%
2012 18.55% 11.51%
2011 -14.25% 7.28%
2010 11.85% 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

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
SDY $10,000 $34,806 12.44%

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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