The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between VEU and VXF? And which fund is better?
The expense ratio of VEU is 0.02 percentage points higher than VXF’s (0.08% vs. 0.06%). VEU also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than VXF over the past ten years.
In this article, we’ll compare VEU vs. VXF. We’ll look at industry exposure and fund composition, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VEU’s and VXF’s annual returns, performance, and risk metrics and examine how these affect their overall returns.
Summary
| VEU | VXF | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Vanguard Extended Market Index Fund ETF Shares |
| Category | Foreign Large Blend | Mid-Cap Growth |
| Issuer | Vanguard | Vanguard |
| AUM | 53.64B | 114.53B |
| Avg. Return | 6.64% | 15.47% |
| Div. Yield | 2.31% | 1.19% |
| Expense Ratio | 0.08% | 0.06% |
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
VEU’s dividend yield is 1.12% higher than that of VXF (2.31% vs. 1.19%). Also, VEU yielded on average 8.83% less per year over the past decade (6.64% vs. 15.47%). The expense ratio of VEU is 0.02 percentage points higher than VXF’s (0.08% vs. 0.06%).
Fund Composition
Industry Exposure
| VEU | VXF | |
| Technology | 12.94% | 23.61% |
| Industrials | 12.19% | 11.31% |
| Energy | 4.69% | 2.46% |
| Communication Services | 7.44% | 7.29% |
| Utilities | 2.89% | 1.65% |
| Healthcare | 9.34% | 15.25% |
| Consumer Defensive | 8.28% | 3.09% |
| Real Estate | 3.04% | 8.16% |
| Financial Services | 18.46% | 12.56% |
| Consumer Cyclical | 12.57% | 11.35% |
| Basic Materials | 8.17% | 3.26% |
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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
VEU is 5.90% more exposed to the Financial Services sector than VXF (18.46% vs 12.56%). VEU’s exposure to Technology and Consumer Cyclical stocks is 10.67% lower and 1.22% higher respectively (12.94% vs. 23.61% and 12.57% vs. 11.35%). In total, Real Estate, Energy, and Communication Services also make up 2.74% less of the fund’s holdings compared to VXF (15.17% vs. 17.91%).
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%.
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
Risk Analysis
| VEU | VXF | |
| Mean Return | 0.56 | 1.24 |
| R-squared | 98.44 | 85.73 |
| Std. Deviation | 15.08 | 18.04 |
| Alpha | 0.28 | -3.26 |
| Beta | 0.99 | 1.23 |
| Sharpe Ratio | 0.4 | 0.79 |
| Treynor Ratio | 5.12 | 10.92 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Treynor Ratio of 5.12 with a R-squared of 98.44 and a Sharpe Ratio of 0.4. Its Alpha is 0.28 while VEU’s Beta is 0.99. Furthermore, the fund has a Standard Deviation of 15.08 and a Mean Return of 0.56.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a Standard Deviation of 18.04 and a R-squared of 85.73. Its Beta is 1.23 while VXF’s Sharpe Ratio is 0.79. Furthermore, the fund has a Mean Return of 1.24 and a Alpha of -3.26.
VEU’s Mean Return is 0.68 points lower than that of VXF and its R-squared is 12.71 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than VXF. The Alpha and Beta of VEU are 3.54 points higher and 0.24 points lower than VXF’s Alpha and Beta.
Performance
Annual Returns
| Year | VEU | VXF |
| 2020 | 11.39% | 32.19% |
| 2019 | 21.63% | 28.04% |
| 2018 | -13.97% | -9.37% |
| 2017 | 27.27% | 18.1% |
| 2016 | 4.77% | 16.16% |
| 2015 | -4.67% | -3.26% |
| 2014 | -4.05% | 7.55% |
| 2013 | 14.5% | 38.37% |
| 2012 | 18.55% | 18.48% |
| 2011 | -14.25% | -3.61% |
| 2010 | 11.85% | 27.55% |
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $18,507 | 6.64% |
| VXF | $10,000 | $44,130 | 15.47% |
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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
VEU’s CAGR is 8.83 percentage points lower than that of VXF and as a result, would have yielded $25,623 less on a $10,000 investment. Thus, VEU performed worse than VXF by 8.83% annually.
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