VEU vs. VV: What’s The Difference?

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

The expense ratio of VEU is 0.04 percentage points higher than VV’s (0.08% vs. 0.04%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than VV over the past ten years.

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

Summary

VEU VV
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares Vanguard Large-Cap Index Fund ETF Shares
Category Foreign Large Blend Large Blend
Issuer Vanguard Vanguard
AUM 53.64B 37.65B
Avg. Return 6.64% 14.75%
Div. Yield 2.31% 1.26%
Expense Ratio 0.08% 0.04%

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 Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.

VEU’s dividend yield is 1.05% higher than that of VV (2.31% vs. 1.26%). Also, VEU yielded on average 8.11% less per year over the past decade (6.64% vs. 14.75%). The expense ratio of VEU is 0.04 percentage points higher than VV’s (0.08% vs. 0.04%).

Fund Composition

Industry Exposure

VEU vs. VV - Industry Exposure

VEU VV
Technology 12.94% 25.38%
Industrials 12.19% 8.39%
Energy 4.69% 2.62%
Communication Services 7.44% 11.68%
Utilities 2.89% 2.35%
Healthcare 9.34% 13.22%
Consumer Defensive 8.28% 6.06%
Real Estate 3.04% 2.7%
Financial Services 18.46% 13.82%
Consumer Cyclical 12.57% 11.65%
Basic Materials 8.17% 2.13%

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 Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.

VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.

VEU is 4.64% more exposed to the Financial Services sector than VV (18.46% vs 13.82%). VEU’s exposure to Technology and Consumer Cyclical stocks is 12.44% lower and 0.92% higher respectively (12.94% vs. 25.38% and 12.57% vs. 11.65%). In total, Real Estate, Energy, and Communication Services also make up 1.83% less of the fund’s holdings compared to VV (15.17% vs. 17.00%).

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%.

VV - Holdings

VV Holdings Weight
Apple Inc 5.7%
Microsoft Corp 5.35%
Amazon.com Inc 3.87%
Facebook Inc Class A 2.19%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.81%
Tesla Inc 1.37%
Berkshire Hathaway Inc Class B 1.3%
NVIDIA Corp 1.24%
JPMorgan Chase & Co 1.24%

VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.

Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.

Risk Analysis

VEU VV
Mean Return 0.56 1.24
R-squared 98.44 99.86
Std. Deviation 15.08 13.75
Alpha 0.28 -0.08
Beta 0.99 1.01
Sharpe Ratio 0.4 1.04
Treynor Ratio 5.12 14.14

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

The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Treynor Ratio of 14.14 with a Standard Deviation of 13.75 and a Sharpe Ratio of 1.04. Its R-squared is 99.86 while VV’s Alpha is -0.08. Furthermore, the fund has a Beta of 1.01 and a Mean Return of 1.24.

VEU’s Mean Return is 0.68 points lower than that of VV and its R-squared is 1.42 points lower. With a Standard Deviation of 15.08, VEU is slightly more volatile than VV. The Alpha and Beta of VEU are 0.36 points higher and 0.02 points lower than VV’s Alpha and Beta.

Performance

Annual Returns

VEU vs. VV - Annual Returns

Year VEU VV
2020 11.39% 20.99%
2019 21.63% 31.39%
2018 -13.97% -4.44%
2017 27.27% 22.03%
2016 4.77% 11.65%
2015 -4.67% 1.07%
2014 -4.05% 13.39%
2013 14.5% 32.65%
2012 18.55% 16.09%
2011 -14.25% 1.58%
2010 11.85% 15.81%

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 2013 was the strongest year for VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% respectively.

Portfolio Growth

VEU vs. VV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEU $10,000 $18,507 6.64%
VV $10,000 $42,970 14.75%

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 VV, the end total would have been $42,970. This equates to a $32,970 profit over 11 years and a compound annual growth rate (CAGR) of 14.75%.

VEU’s CAGR is 8.11 percentage points lower than that of VV and as a result, would have yielded $24,463 less on a $10,000 investment. Thus, VEU performed worse than VV by 8.11% annually.


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