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.

Summary

VEU VLUE
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares iShares MSCI USA Value Factor ETF
Category Foreign Large Blend Large Value
Issuer Vanguard iShares
AUM 53.64B 15.95B
Avg. Return 6.64% 8.91%
Div. Yield 2.31% 1.89%
Expense Ratio 0.08% 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%).

Fund Composition

Industry Exposure

VEU vs. VLUE - Industry Exposure

VEU VLUE
Technology 12.94% 26.89%
Industrials 12.19% 9.14%
Energy 4.69% 2.42%
Communication Services 7.44% 10.39%
Utilities 2.89% 2.68%
Healthcare 9.34% 14.31%
Consumer Defensive 8.28% 7.22%
Real Estate 3.04% 3.19%
Financial Services 18.46% 10.96%
Consumer Cyclical 12.57% 10.66%
Basic Materials 8.17% 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 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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

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%.

Risk Analysis

VEU VLUE
Mean Return 0.56 0
R-squared 98.44 0
Std. Deviation 15.08 0
Alpha 0.28 0
Beta 0.99 0
Sharpe Ratio 0.4 0
Treynor Ratio 5.12 0

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.

Performance

Annual Returns

VEU vs. VLUE - Annual Returns

Year VEU VLUE
2020 11.39% -0.32%
2019 21.63% 27.47%
2018 -13.97% -11.18%
2017 27.27% 21.97%
2016 4.77% 15.68%
2015 -4.67% -3.54%
2014 -4.05% 12.29%
2013 14.5% 0.0%
2012 18.55% 0.0%
2011 -14.25% 0.0%
2010 11.85% 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

Fund Initial Balance Final Balance CAGR
VEU $10,000 $14,215 6.64%
VLUE $10,000 $17,247 8.91%

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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