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VEU vs. VLUE: What’s The Difference?

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

The expense ratio of VEU is 0.07 percentage points lower than VLUE’s (0.08% vs. 0.15%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than VLUE over the past ten years.

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

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Summary

VEUVLUE
NameVanguard FTSE All-World ex-US Index Fund ETF SharesiShares MSCI USA Value Factor ETF
CategoryForeign Large BlendLarge Value
IssuerVanguardiShares
AUM53.64B15.95B
Avg. Return6.64%8.91%
Div. Yield2.31%1.89%
Expense Ratio0.08%0.15%

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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

VEU’s dividend yield is 0.42% higher than that of VLUE (2.31% vs. 1.89%). Also, VEU yielded on average 2.27% less per year over the past decade (6.64% vs. 8.91%). The expense ratio of VEU is 0.07 percentage points lower than VLUE’s (0.08% vs. 0.15%).

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Fund Composition

Industry Exposure

VEU vs. VLUE - Industry Exposure

VEUVLUE
Technology12.94%26.89%
Industrials12.19%9.14%
Energy4.69%2.42%
Communication Services7.44%10.39%
Utilities2.89%2.68%
Healthcare9.34%14.31%
Consumer Defensive8.28%7.22%
Real Estate3.04%3.19%
Financial Services18.46%10.96%
Consumer Cyclical12.57%10.66%
Basic Materials8.17%2.14%

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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

VEU is 7.50% more exposed to the Financial Services sector than VLUE (18.46% vs 10.96%). VEU’s exposure to Technology and Consumer Cyclical stocks is 13.95% lower and 1.91% higher respectively (12.94% vs. 26.89% and 12.57% vs. 10.66%). In total, Real Estate, Energy, and Communication Services also make up 0.83% less of the fund’s holdings compared to VLUE (15.17% vs. 16.00%).

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%.

VLUE - Holdings

VLUE HoldingsWeight
AT&T Inc7.13%
Intel Corp6.14%
General Motors Co3.19%
Micron Technology Inc3.14%
Cisco Systems Inc3.05%
International Business Machines Corp2.76%
Target Corp2.38%
Citigroup Inc2.32%
Ford Motor Co2.23%
Pfizer Inc2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

VEUVLUE
Mean Return0.560
R-squared98.440
Std. Deviation15.080
Alpha0.280
Beta0.990
Sharpe Ratio0.40
Treynor Ratio5.120

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

The iShares MSCI USA Value Factor ETF (VLUE) has a Alpha of 0 with a Mean Return of 0 and a R-squared of 0. Its Standard Deviation is 0 while VLUE’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.

VEU’s Mean Return is 0.56 points higher than that of VLUE and its R-squared is 98.44 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than VLUE. The Alpha and Beta of VEU are 0.28 points higher and 0.99 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

VEU vs. VLUE - Annual Returns

YearVEUVLUE
202011.39%-0.32%
201921.63%27.47%
2018-13.97%-11.18%
201727.27%21.97%
20164.77%15.68%
2015-4.67%-3.54%
2014-4.05%12.29%
201314.5%0.0%
201218.55%0.0%
2011-14.25%0.0%
201011.85%0.0%

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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VEU vs. VLUE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VEU$10,000$14,2156.64%
VLUE$10,000$17,2478.91%

A $10,000 investment in VEU would have resulted in a final balance of $14,215. This is a profit of $4,215 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.64%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

VEU’s CAGR is 2.27 percentage points lower than that of VLUE and as a result, would have yielded $3,032 less on a $10,000 investment. Thus, VEU performed worse than VLUE by 2.27% annually.


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