VGK vs. EFV: What’s The Difference?

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

The expense ratio of VGK is 0.31 percentage points lower than EFV’s (0.08% vs. 0.39%). VGK also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VGK has provided higher returns than EFV over the past 11 years.

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

Summary

VGK EFV
Name Vanguard FTSE Europe Index Fund ETF Shares iShares MSCI EAFE Value ETF
Category Europe Stock Foreign Large Value
Issuer Vanguard iShares
AUM 25.7B 14.37B
Avg. Return 6.68% 3.99%
Div. Yield 2.52% 2.94%
Expense Ratio 0.08% 0.39%

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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.

VGK’s dividend yield is 0.42% lower than that of EFV (2.52% vs. 2.94%). Also, VGK yielded on average 2.69% more per year over the past decade (6.68% vs. 3.99%). The expense ratio of VGK is 0.31 percentage points lower than EFV’s (0.08% vs. 0.39%).

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Fund Composition

Industry Exposure

VGK vs. EFV - Industry Exposure

VGK EFV
Technology 8.3% 2.98%
Industrials 15.58% 11.6%
Energy 4.3% 6.6%
Communication Services 5.09% 6.46%
Utilities 3.89% 6.14%
Healthcare 13.76% 9.19%
Consumer Defensive 11.39% 6.82%
Real Estate 2.57% 5.06%
Financial Services 15.85% 26.55%
Consumer Cyclical 11.6% 9.0%
Basic Materials 7.67% 9.59%

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 EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.

EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.

VGK is 10.70% less exposed to the Financial Services sector than EFV (15.85% vs 26.55%). VGK’s exposure to Industrials and Healthcare stocks is 3.98% higher and 4.57% higher respectively (15.58% vs. 11.6% and 13.76% vs. 9.19%). In total, Utilities, Energy, and Communication Services also make up 5.92% less of the fund’s holdings compared to EFV (13.28% vs. 19.20%).

Holdings

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

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%.

EFV - Holdings

EFV Holdings Weight
Novartis AG 2.41%
Toyota Motor Corp 2.21%
Commonwealth Bank of Australia 1.59%
Siemens AG 1.45%
Sanofi SA 1.42%
HSBC Holdings PLC 1.4%
TotalEnergies SE 1.35%
Allianz SE 1.23%
GlaxoSmithKline PLC 1.18%
Rio Tinto PLC 1.1%

EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.

HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.

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Risk Analysis

VGK EFV
Mean Return 0.61 0.42
R-squared 92.76 92.15
Std. Deviation 16.65 16.53
Alpha 0.45 -1.77
Beta 1.06 1.05
Sharpe Ratio 0.4 0.26
Treynor Ratio 5.12 2.92

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

The iShares MSCI EAFE Value ETF (EFV) has a Sharpe Ratio of 0.26 with a Beta of 1.05 and a Alpha of -1.77. Its Treynor Ratio is 2.92 while EFV’s Standard Deviation is 16.53. Furthermore, the fund has a R-squared of 92.15 and a Mean Return of 0.42.

VGK’s Mean Return is 0.19 points higher than that of EFV and its R-squared is 0.61 points higher. With a Standard Deviation of 16.65, VGK is slightly more volatile than EFV. The Alpha and Beta of VGK are 2.22 points higher and 0.01 points higher than EFV’s Alpha and Beta.

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Performance

Annual Returns

VGK vs. EFV - Annual Returns

Year VGK EFV
2020 6.5% -2.78%
2019 24.26% 15.97%
2018 -14.79% -14.88%
2017 27.06% 21.22%
2016 -0.59% 4.87%
2015 -1.87% -5.89%
2014 -6.56% -5.65%
2013 24.93% 22.61%
2012 21.01% 17.52%
2011 -11.49% -12.24%
2010 5.01% 3.18%

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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.

Portfolio Growth

VGK vs. EFV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGK $10,000 $18,350 6.68%
EFV $10,000 $14,134 3.99%

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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.

VGK’s CAGR is 2.69 percentage points higher than that of EFV and as a result, would have yielded $4,216 more on a $10,000 investment. Thus, VGK outperformed EFV by 2.69% annually.


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