Skip to content

VEU vs. VGK: What’s The Difference?

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

VEU and VGK have the same expense ratio: 0.08%. VEU also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than VGK over the past ten years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VEUVGK
NameVanguard FTSE All-World ex-US Index Fund ETF SharesVanguard FTSE Europe Index Fund ETF Shares
CategoryForeign Large BlendEurope Stock
IssuerVanguardVanguard
AUM53.64B25.7B
Avg. Return6.64%6.68%
Div. Yield2.31%2.52%
Expense Ratio0.08%0.08%

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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

VEU’s dividend yield is 0.21% lower than that of VGK (2.31% vs. 2.52%). Also, VEU yielded on average 0.04% less per year over the past decade (6.64% vs. 6.68%). VEU and VGK have the same expense ratio: 0.08%.

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VEU vs. VGK - Industry Exposure

VEUVGK
Technology12.94%8.3%
Industrials12.19%15.58%
Energy4.69%4.3%
Communication Services7.44%5.09%
Utilities2.89%3.89%
Healthcare9.34%13.76%
Consumer Defensive8.28%11.39%
Real Estate3.04%2.57%
Financial Services18.46%15.85%
Consumer Cyclical12.57%11.6%
Basic Materials8.17%7.67%

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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

VEU is 2.61% more exposed to the Financial Services sector than VGK (18.46% vs 15.85%). VEU’s exposure to Technology and Consumer Cyclical stocks is 4.64% higher and 0.97% higher respectively (12.94% vs. 8.3% and 12.57% vs. 11.6%). In total, Real Estate, Energy, and Communication Services also make up 3.21% more of the fund’s holdings compared to VGK (15.17% vs. 11.96%).

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%.

VGK - Holdings

VGK HoldingsWeight
Nestle SA2.82%
ASML Holding NV2.2%
Roche Holding AG2.13%
LVMH Moet Hennessy Louis Vuitton SE1.58%
Novartis AG1.55%
AstraZeneca PLC1.27%
SAP SE1.25%
Unilever PLC1.23%
Novo Nordisk A/S B1.09%
Siemens AG0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VEUVGK
Mean Return0.560.61
R-squared98.4492.76
Std. Deviation15.0816.65
Alpha0.280.45
Beta0.991.06
Sharpe Ratio0.40.4
Treynor Ratio5.125.12

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

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a R-squared of 92.76 with a Mean Return of 0.61 and a Treynor Ratio of 5.12. Its Beta is 1.06 while VGK’s Alpha is 0.45. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Standard Deviation of 16.65.

VEU’s Mean Return is 0.05 points lower than that of VGK and its R-squared is 5.68 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than VGK. The Alpha and Beta of VEU are 0.17 points lower and 0.07 points lower than VGK’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VEU vs. VGK - Annual Returns

YearVEUVGK
202011.39%6.5%
201921.63%24.26%
2018-13.97%-14.79%
201727.27%27.06%
20164.77%-0.59%
2015-4.67%-1.87%
2014-4.05%-6.56%
201314.5%24.93%
201218.55%21.01%
2011-14.25%-11.49%
201011.85%5.01%

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 VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

VEU vs. VGK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VEU$10,000$18,5076.64%
VGK$10,000$18,3506.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

VEU’s CAGR is 0.04 percentage points lower than that of VGK and as a result, would have yielded $157 more on a $10,000 investment. Thus, VEU performed worse than VGK by 0.04% 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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) 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!

3) 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!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

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

Leave a Reply

Your email address will not be published.