The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VEU and VBK? And which fund is better?
The expense ratio of VEU is 0.01 percentage points higher than VBK’s (0.08% vs. 0.07%). VEU also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than VBK over the past ten years.
In this article, we’ll compare VEU vs. VBK. We’ll look at risk metrics and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VEU’s and VBK’s fund composition, industry exposure, and performance and examine how these affect their overall returns.
Summary
| VEU | VBK | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Foreign Large Blend | Small Growth |
| Issuer | Vanguard | Vanguard |
| AUM | 53.64B | 37.89B |
| Avg. Return | 6.64% | 16.53% |
| Div. Yield | 2.31% | 0.45% |
| Expense Ratio | 0.08% | 0.07% |
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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
VEU’s dividend yield is 1.86% higher than that of VBK (2.31% vs. 0.45%). Also, VEU yielded on average 9.89% less per year over the past decade (6.64% vs. 16.53%). The expense ratio of VEU is 0.01 percentage points higher than VBK’s (0.08% vs. 0.07%).
Fund Composition
Industry Exposure
| VEU | VBK | |
| Technology | 12.94% | 27.87% |
| Industrials | 12.19% | 13.19% |
| Energy | 4.69% | 1.77% |
| Communication Services | 7.44% | 3.24% |
| Utilities | 2.89% | 0.32% |
| Healthcare | 9.34% | 23.24% |
| Consumer Defensive | 8.28% | 3.83% |
| Real Estate | 3.04% | 7.87% |
| Financial Services | 18.46% | 4.05% |
| Consumer Cyclical | 12.57% | 12.13% |
| Basic Materials | 8.17% | 2.49% |
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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
VEU is 14.41% more exposed to the Financial Services sector than VBK (18.46% vs 4.05%). VEU’s exposure to Technology and Consumer Cyclical stocks is 14.93% lower and 0.44% higher respectively (12.94% vs. 27.87% and 12.57% vs. 12.13%). In total, Real Estate, Energy, and Communication Services also make up 2.29% more of the fund’s holdings compared to VBK (15.17% vs. 12.88%).
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%.
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
Risk Analysis
| VEU | VBK | |
| Mean Return | 0.56 | 1.22 |
| R-squared | 98.44 | 80.56 |
| Std. Deviation | 15.08 | 17.95 |
| Alpha | 0.28 | -2.81 |
| Beta | 0.99 | 1.18 |
| Sharpe Ratio | 0.4 | 0.78 |
| Treynor Ratio | 5.12 | 11.18 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Treynor Ratio of 5.12 with a Sharpe Ratio of 0.4 and a Mean Return of 0.56. Its R-squared is 98.44 while VEU’s Beta is 0.99. Furthermore, the fund has a Alpha of 0.28 and a Standard Deviation of 15.08.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Mean Return of 1.22 with a Alpha of -2.81 and a Sharpe Ratio of 0.78. Its R-squared is 80.56 while VBK’s Standard Deviation is 17.95. Furthermore, the fund has a Treynor Ratio of 11.18 and a Beta of 1.18.
VEU’s Mean Return is 0.66 points lower than that of VBK and its R-squared is 17.88 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than VBK. The Alpha and Beta of VEU are 3.09 points higher and 0.19 points lower than VBK’s Alpha and Beta.
Performance
Annual Returns
| Year | VEU | VBK |
| 2020 | 11.39% | 35.29% |
| 2019 | 21.63% | 32.75% |
| 2018 | -13.97% | -5.68% |
| 2017 | 27.27% | 21.9% |
| 2016 | 4.77% | 10.74% |
| 2015 | -4.67% | -2.51% |
| 2014 | -4.05% | 4.02% |
| 2013 | 14.5% | 38.18% |
| 2012 | 18.55% | 17.67% |
| 2011 | -14.25% | -1.43% |
| 2010 | 11.85% | 30.87% |
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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $18,507 | 6.64% |
| VBK | $10,000 | $48,639 | 16.53% |
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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
VEU’s CAGR is 9.89 percentage points lower than that of VBK and as a result, would have yielded $30,132 less on a $10,000 investment. Thus, VEU performed worse than VBK by 9.89% annually.
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