VGT vs. EFV: What’s The Difference?

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

The expense ratio of VGT is 0.29 percentage points lower than EFV’s (0.1% vs. 0.39%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than EFV over the past ten years.

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

Summary

VGT EFV
Name Vanguard Information Technology Index Fund ETF Shares iShares MSCI EAFE Value ETF
Category Technology Foreign Large Value
Issuer Vanguard iShares
AUM 54.13B 14.37B
Avg. Return 20.84% 3.99%
Div. Yield 0.66% 2.94%
Expense Ratio 0.1% 0.39%

The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.

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%.

VGT’s dividend yield is 2.28% lower than that of EFV (0.66% vs. 2.94%). Also, VGT yielded on average 16.84% more per year over the past decade (20.84% vs. 3.99%). The expense ratio of VGT is 0.29 percentage points lower than EFV’s (0.1% vs. 0.39%).

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Fund Composition

Industry Exposure

VGT vs. EFV - Industry Exposure

VGT EFV
Technology 88.89% 2.98%
Industrials 1.67% 11.6%
Energy 0.0% 6.6%
Communication Services 0.61% 6.46%
Utilities 0.0% 6.14%
Healthcare 0.0% 9.19%
Consumer Defensive 0.0% 6.82%
Real Estate 0.0% 5.06%
Financial Services 8.83% 26.55%
Consumer Cyclical 0.0% 9.0%
Basic Materials 0.0% 9.59%

The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.

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%.

VGT is 85.91% more exposed to the Technology sector than EFV (88.89% vs 2.98%). VGT’s exposure to Financial Services and Industrials stocks is 17.72% lower and 9.93% lower respectively (8.83% vs. 26.55% and 1.67% vs. 11.6%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.88% less of the fund’s holdings compared to EFV (0.00% vs. 20.88%).

Holdings

VGT - Holdings

VGT Holdings Weight
Apple Inc 19.58%
Microsoft Corp 16.53%
NVIDIA Corp 4.22%
Visa Inc Class A 3.16%
PayPal Holdings Inc 2.76%
Mastercard Inc Class A 2.76%
Adobe Inc 2.39%
Intel Corp 1.94%
Salesforce.com Inc 1.91%
Cisco Systems Inc 1.9%

VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.

Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.

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

VGT EFV
Mean Return 1.76 0.42
R-squared 74.84 92.15
Std. Deviation 16.61 16.53
Alpha 10.41 -1.77
Beta 1.02 1.05
Sharpe Ratio 1.23 0.26
Treynor Ratio 20.55 2.92

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Alpha of 10.41 with a Mean Return of 1.76 and a Treynor Ratio of 20.55. Its Standard Deviation is 16.61 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Beta of 1.02 and a R-squared of 74.84.

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

VGT’s Mean Return is 1.34 points higher than that of EFV and its R-squared is 17.31 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than EFV. The Alpha and Beta of VGT are 12.18 points higher and 0.03 points lower than EFV’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. EFV - Annual Returns

Year VGT EFV
2020 45.94% -2.78%
2019 48.68% 15.97%
2018 2.52% -14.88%
2017 37.07% 21.22%
2016 13.73% 4.87%
2015 5.02% -5.89%
2014 18.01% -5.65%
2013 30.91% 22.61%
2012 14.05% 17.52%
2011 0.52% -12.24%
2010 12.74% 3.18%

VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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

VGT vs. EFV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGT $10,000 $72,718 20.84%
EFV $10,000 $14,134 3.99%

A $10,000 investment in VGT would have resulted in a final balance of $72,718. This is a profit of $62,718 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

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%.

VGT’s CAGR is 16.84 percentage points higher than that of EFV and as a result, would have yielded $58,584 more on a $10,000 investment. Thus, VGT outperformed EFV by 16.84% annually.


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