VGK vs. IUSB: What’s The Difference?

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

The expense ratio of VGK is 0.02 percentage points higher than IUSB’s (0.08% vs. 0.06%). VGK also has a high exposure to the financial services sector while IUSB is mostly comprised of AAA bonds. Overall, VGK has provided higher returns than IUSB over the past 6 years.

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

Summary

VGK IUSB
Name Vanguard FTSE Europe Index Fund ETF Shares iShares Core Total USD Bond Market ETF
Category Europe Stock N/A
Issuer Vanguard iShares
AUM 25.7B 14.49B
Avg. Return 6.68% 4.13%
Div. Yield 2.52% 2.1%
Expense Ratio 0.08% 0.06%

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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

VGK’s dividend yield is 0.42% higher than that of IUSB (2.52% vs. 2.1%). Also, VGK yielded on average 2.55% more per year over the past decade (6.68% vs. 4.13%). The expense ratio of VGK is 0.02 percentage points higher than IUSB’s (0.08% vs. 0.06%).

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Fund Composition

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%.

IUSB - Holdings

IUSB Bond Sectors Weight
AAA 58.32%
BBB 16.98%
A 12.27%
BB 4.33%
AA 3.36%
B 2.8%
Others 1.01%
Below B 0.92%
US Government 0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

VGK IUSB
Mean Return 0.61 0
R-squared 92.76 0
Std. Deviation 16.65 0
Alpha 0.45 0
Beta 1.06 0
Sharpe Ratio 0.4 0
Treynor Ratio 5.12 0

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

The iShares Core Total USD Bond Market ETF (IUSB) has a Alpha of 0 with a Standard Deviation of 0 and a Beta of 0. Its R-squared is 0 while IUSB’s Treynor Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Sharpe Ratio of 0.

VGK’s Mean Return is 0.61 points higher than that of IUSB and its R-squared is 92.76 points higher. With a Standard Deviation of 16.65, VGK is slightly more volatile than IUSB. The Alpha and Beta of VGK are 0.45 points higher and 1.06 points higher than IUSB’s Alpha and Beta.

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Performance

Annual Returns

VGK vs. IUSB - Annual Returns

Year VGK IUSB
2020 6.5% 7.59%
2019 24.26% 9.26%
2018 -14.79% -0.38%
2017 27.06% 4.06%
2016 -0.59% 3.78%
2015 -1.87% 0.46%
2014 -6.56% 0.0%
2013 24.93% 0.0%
2012 21.01% 0.0%
2011 -11.49% 0.0%
2010 5.01% 0.0%

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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

VGK vs. IUSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGK $10,000 $13,976 6.68%
IUSB $10,000 $12,704 4.13%

A $10,000 investment in VGK would have resulted in a final balance of $13,976. This is a profit of $3,976 over 6 years and amounts to a compound annual growth rate (CAGR) of 6.68%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

VGK’s CAGR is 2.55 percentage points higher than that of IUSB and as a result, would have yielded $1,272 more on a $10,000 investment. Thus, VGK outperformed IUSB by 2.55% annually.


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