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.

Summary

VEU VGK
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares Vanguard FTSE Europe Index Fund ETF Shares
Category Foreign Large Blend Europe Stock
Issuer Vanguard Vanguard
AUM 53.64B 25.7B
Avg. Return 6.64% 6.68%
Div. Yield 2.31% 2.52%
Expense Ratio 0.08% 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%.

Fund Composition

Industry Exposure

VEU vs. VGK - Industry Exposure

VEU VGK
Technology 12.94% 8.3%
Industrials 12.19% 15.58%
Energy 4.69% 4.3%
Communication Services 7.44% 5.09%
Utilities 2.89% 3.89%
Healthcare 9.34% 13.76%
Consumer Defensive 8.28% 11.39%
Real Estate 3.04% 2.57%
Financial Services 18.46% 15.85%
Consumer Cyclical 12.57% 11.6%
Basic Materials 8.17% 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 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%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

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%.

Risk Analysis

VEU VGK
Mean Return 0.56 0.61
R-squared 98.44 92.76
Std. Deviation 15.08 16.65
Alpha 0.28 0.45
Beta 0.99 1.06
Sharpe Ratio 0.4 0.4
Treynor Ratio 5.12 5.12

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.

Performance

Annual Returns

VEU vs. VGK - Annual Returns

Year VEU VGK
2020 11.39% 6.5%
2019 21.63% 24.26%
2018 -13.97% -14.79%
2017 27.27% 27.06%
2016 4.77% -0.59%
2015 -4.67% -1.87%
2014 -4.05% -6.56%
2013 14.5% 24.93%
2012 18.55% 21.01%
2011 -14.25% -11.49%
2010 11.85% 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

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
VGK $10,000 $18,350 6.68%

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.


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