The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and VT is a Vanguard N/A fund. So, what’s the difference between VEU and VT? And which fund is better?
VEU and VT have the same expense ratio: 0.08%. VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than VT over the past ten years.
In this article, we’ll compare VEU vs. VT. We’ll look at holdings and industry exposure, as well as at their risk metrics and performance. Moreover, I’ll also discuss VEU’s and VT’s annual returns, fund composition, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard FTSE All-World ex-US Index Fund ETF Shares||Vanguard Total World Stock Index Fund ETF Shares|
|Category||Foreign Large Blend||N/A|
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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.
VEU’s dividend yield is 0.66% higher than that of VT (2.31% vs. 1.65%). Also, VEU yielded on average 3.78% less per year over the past decade (6.64% vs. 10.42%). VEU and VT have the same expense ratio: 0.08%.
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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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.
VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.
VEU is 3.10% more exposed to the Financial Services sector than VT (18.46% vs 15.36%). VEU’s exposure to Technology and Consumer Cyclical stocks is 6.69% lower and 0.25% higher respectively (12.94% vs. 19.63% and 12.57% vs. 12.32%). In total, Real Estate, Energy, and Communication Services also make up 0.97% less of the fund’s holdings compared to VT (15.17% vs. 16.14%).
|Tencent Holdings Ltd||1.57%|
|Alibaba Group Holding Ltd Ordinary Shares||1.4%|
|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%|
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%.
|Facebook Inc Class A||1.1%|
|Alphabet Inc Class A||0.97%|
|Alphabet Inc Class C||0.95%|
|JPMorgan Chase & Co||0.62%|
|Tencent Holdings Ltd||0.6%|
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
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The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Beta of 0.99 with a Sharpe Ratio of 0.4 and a Mean Return of 0.56. Its Standard Deviation is 15.08 while VEU’s R-squared is 98.44. Furthermore, the fund has a Treynor Ratio of 5.12 and a Alpha of 0.28.
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Standard Deviation of 14.19 with a Alpha of 0.2 and a Beta of 1.01. Its Sharpe Ratio is 0.71 while VT’s R-squared is 99.35. Furthermore, the fund has a Mean Return of 0.9 and a Treynor Ratio of 9.5.
VEU’s Mean Return is 0.34 points lower than that of VT and its R-squared is 0.91 points lower. With a Standard Deviation of 15.08, VEU is slightly more volatile than VT. The Alpha and Beta of VEU are 0.08 points higher and 0.02 points lower than VT’s Alpha and Beta.
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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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.
VEU’s CAGR is 3.78 percentage points lower than that of VT and as a result, would have yielded $9,232 less on a $10,000 investment. Thus, VEU performed worse than VT by 3.78% annually.
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