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VGK vs. ACWI: What’s The Difference?

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. VGK is a Vanguard Europe Stock fund and ACWI is a iShares N/A fund. So, what’s the difference between VGK and ACWI? And which fund is better?

The expense ratio of VGK is 0.24 percentage points lower than ACWI’s (0.08% vs. 0.32%). VGK also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VGK has provided lower returns than ACWI over the past 11 years.

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

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Summary

VGKACWI
NameVanguard FTSE Europe Index Fund ETF SharesiShares MSCI ACWI ETF
CategoryEurope StockN/A
IssuerVanguardiShares
AUM25.7B16.85B
Avg. Return6.68%10.21%
Div. Yield2.52%1.39%
Expense Ratio0.08%0.32%

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

VGK’s dividend yield is 1.13% higher than that of ACWI (2.52% vs. 1.39%). Also, VGK yielded on average 3.54% less per year over the past decade (6.68% vs. 10.21%). The expense ratio of VGK is 0.24 percentage points lower than ACWI’s (0.08% vs. 0.32%).

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Fund Composition

Industry Exposure

VGK vs. ACWI - Industry Exposure

VGKACWI
Technology8.3%20.41%
Industrials15.58%9.65%
Energy4.3%3.48%
Communication Services5.09%9.87%
Utilities3.89%2.61%
Healthcare13.76%11.74%
Consumer Defensive11.39%7.15%
Real Estate2.57%2.75%
Financial Services15.85%15.58%
Consumer Cyclical11.6%12.01%
Basic Materials7.67%4.73%

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

VGK is 0.27% more exposed to the Financial Services sector than ACWI (15.85% vs 15.58%). VGK’s exposure to Industrials and Healthcare stocks is 5.93% higher and 2.02% higher respectively (15.58% vs. 9.65% and 13.76% vs. 11.74%). In total, Utilities, Energy, and Communication Services also make up 2.68% less of the fund’s holdings compared to ACWI (13.28% vs. 15.96%).

Holdings

VGK - Holdings

VGK HoldingsWeight
Nestle SA2.82%
ASML Holding NV2.2%
Roche Holding AG2.13%
LVMH Moet Hennessy Louis Vuitton SE1.58%
Novartis AG1.55%
AstraZeneca PLC1.27%
SAP SE1.25%
Unilever PLC1.23%
Novo Nordisk A/S B1.09%
Siemens AG0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

ACWI - Holdings

ACWI HoldingsWeight
Apple Inc3.44%
Microsoft Corp2.91%
Amazon.com Inc2.21%
Facebook Inc A1.25%
Alphabet Inc Class C1.12%
Alphabet Inc A1.09%
Taiwan Semiconductor Manufacturing Co Ltd0.79%
Tesla Inc0.78%
NVIDIA Corp0.74%
JPMorgan Chase & Co0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

VGKACWI
Mean Return0.610.89
R-squared92.7699.96
Std. Deviation16.6514.05
Alpha0.450.15
Beta1.061
Sharpe Ratio0.40.71
Treynor Ratio5.129.45

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Treynor Ratio of 5.12 with a Sharpe Ratio of 0.4 and a Beta of 1.06. Its R-squared is 92.76 while VGK’s Standard Deviation is 16.65. Furthermore, the fund has a Mean Return of 0.61 and a Alpha of 0.45.

The iShares MSCI ACWI ETF (ACWI) has a Mean Return of 0.89 with a Beta of 1 and a Standard Deviation of 14.05. Its Alpha is 0.15 while ACWI’s Treynor Ratio is 9.45. Furthermore, the fund has a Sharpe Ratio of 0.71 and a R-squared of 99.96.

VGK’s Mean Return is 0.28 points lower than that of ACWI and its R-squared is 7.20 points lower. With a Standard Deviation of 16.65, VGK is slightly more volatile than ACWI. The Alpha and Beta of VGK are 0.30 points higher and 0.06 points higher than ACWI’s Alpha and Beta.

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Performance

Annual Returns

VGK vs. ACWI - Annual Returns

YearVGKACWI
20206.5%16.38%
201924.26%26.7%
2018-14.79%-9.15%
201727.06%24.35%
2016-0.59%8.22%
2015-1.87%-2.39%
2014-6.56%4.64%
201324.93%22.91%
201221.01%15.99%
2011-11.49%-7.6%
20105.01%12.31%

VGK had its best year in 2017 with an annual return of 27.06%. VGK’s worst year over the past decade yielded -14.79% and occurred in 2018. In most years the Vanguard FTSE Europe Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to -0.59%, 5.01%, and 6.5% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

VGK vs. ACWI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGK$10,000$18,3506.68%
ACWI$10,000$27,24110.21%

A $10,000 investment in VGK would have resulted in a final balance of $18,350. This is a profit of $8,350 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.68%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

VGK’s CAGR is 3.54 percentage points lower than that of ACWI and as a result, would have yielded $8,891 less on a $10,000 investment. Thus, VGK performed worse than ACWI by 3.54% annually.


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