VEU vs. VBR: What’s The Difference?

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and VBR is a Vanguard Small Value fund. So, what’s the difference between VEU and VBR? And which fund is better?

The expense ratio of VEU is 0.01 percentage points higher than VBR’s (0.08% vs. 0.07%). VEU also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than VBR over the past ten years.

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

Summary

VEU VBR
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares Vanguard Small-Cap Value Index Fund ETF Shares
Category Foreign Large Blend Small Value
Issuer Vanguard Vanguard
AUM 53.64B 48.08B
Avg. Return 6.64% 12.28%
Div. Yield 2.31% 1.6%
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

VEU’s dividend yield is 0.71% higher than that of VBR (2.31% vs. 1.6%). Also, VEU yielded on average 5.64% less per year over the past decade (6.64% vs. 12.28%). The expense ratio of VEU is 0.01 percentage points higher than VBR’s (0.08% vs. 0.07%).

Fund Composition

Industry Exposure

VEU vs. VBR - Industry Exposure

VEU VBR
Technology 12.94% 8.39%
Industrials 12.19% 18.44%
Energy 4.69% 5.15%
Communication Services 7.44% 1.77%
Utilities 2.89% 3.65%
Healthcare 9.34% 7.16%
Consumer Defensive 8.28% 4.36%
Real Estate 3.04% 10.92%
Financial Services 18.46% 20.04%
Consumer Cyclical 12.57% 13.82%
Basic Materials 8.17% 6.31%

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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

VEU is 1.58% less exposed to the Financial Services sector than VBR (18.46% vs 20.04%). VEU’s exposure to Technology and Consumer Cyclical stocks is 4.55% higher and 1.25% lower respectively (12.94% vs. 8.39% and 12.57% vs. 13.82%). In total, Real Estate, Energy, and Communication Services also make up 2.67% less of the fund’s holdings compared to VBR (15.17% vs. 17.84%).

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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

VEU VBR
Mean Return 0.56 1.08
R-squared 98.44 82.2
Std. Deviation 15.08 18.37
Alpha 0.28 -5.09
Beta 0.99 1.23
Sharpe Ratio 0.4 0.67
Treynor Ratio 5.12 9.15

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 Sharpe Ratio of 0.4. Its Standard Deviation is 15.08 while VEU’s Alpha is 0.28. Furthermore, the fund has a Treynor Ratio of 5.12 and a Mean Return of 0.56.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Alpha of -5.09 with a Mean Return of 1.08 and a Treynor Ratio of 9.15. Its Sharpe Ratio is 0.67 while VBR’s Beta is 1.23. Furthermore, the fund has a R-squared of 82.2 and a Standard Deviation of 18.37.

VEU’s Mean Return is 0.52 points lower than that of VBR and its R-squared is 16.24 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than VBR. The Alpha and Beta of VEU are 5.37 points higher and 0.24 points lower than VBR’s Alpha and Beta.

Performance

Annual Returns

VEU vs. VBR - Annual Returns

Year VEU VBR
2020 11.39% 5.82%
2019 21.63% 22.76%
2018 -13.97% -12.22%
2017 27.27% 11.79%
2016 4.77% 24.8%
2015 -4.67% -4.67%
2014 -4.05% 10.55%
2013 14.5% 36.57%
2012 18.55% 18.78%
2011 -14.25% -4.05%
2010 11.85% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

VEU vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
VBR $10,000 $32,611 12.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

VEU’s CAGR is 5.64 percentage points lower than that of VBR and as a result, would have yielded $14,104 less on a $10,000 investment. Thus, VEU performed worse than VBR by 5.64% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply