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VIG vs. VEU: What’s The Difference?

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between VIG and VEU? And which fund is better?

The expense ratio of VIG is 0.02 percentage points lower than VEU’s (0.06% vs. 0.08%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than VEU over the past ten years.

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

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Summary

VIGVEU
NameVanguard Dividend Appreciation Index Fund ETF SharesVanguard FTSE All-World ex-US Index Fund ETF Shares
CategoryLarge BlendForeign Large Blend
IssuerVanguardVanguard
AUM71.92B53.64B
Avg. Return13.35%6.64%
Div. Yield1.56%2.31%
Expense Ratio0.06%0.08%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 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%.

VIG’s dividend yield is 0.75% lower than that of VEU (1.56% vs. 2.31%). Also, VIG yielded on average 6.71% more per year over the past decade (13.35% vs. 6.64%). The expense ratio of VIG is 0.02 percentage points lower than VEU’s (0.06% vs. 0.08%).

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Fund Composition

Industry Exposure

VIG vs. VEU - Industry Exposure

VIGVEU
Technology14.93%12.94%
Industrials17.23%12.19%
Energy0.0%4.69%
Communication Services2.86%7.44%
Utilities2.81%2.89%
Healthcare15.52%9.34%
Consumer Defensive15.32%8.28%
Real Estate0.0%3.04%
Financial Services17.18%18.46%
Consumer Cyclical10.47%12.57%
Basic Materials3.67%8.17%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.

VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.

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%.

VIG is 5.04% more exposed to the Industrials sector than VEU (17.23% vs 12.19%). VIG’s exposure to Financial Services and Healthcare stocks is 1.28% lower and 6.18% higher respectively (17.18% vs. 18.46% and 15.52% vs. 9.34%). In total, Energy, Utilities, and Communication Services also make up 9.35% less of the fund’s holdings compared to VEU (5.67% vs. 15.02%).

Holdings

VIG - Holdings

VIG HoldingsWeight
Microsoft Corp4.19%
JPMorgan Chase & Co3.8%
Johnson & Johnson3.67%
Walmart Inc3.38%
Visa Inc Class A3.22%
UnitedHealth Group Inc3.22%
The Home Depot Inc2.91%
Procter & Gamble Co2.82%
Comcast Corp Class A2.21%
Coca-Cola Co1.98%

VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.

UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.

VEU - Holdings

VEU HoldingsWeight
Tencent Holdings Ltd1.57%
Alibaba Group Holding Ltd Ordinary Shares1.4%
Nestle SA1.22%
Taiwan Semiconductor Manufacturing Co Ltd0.98%
ASML Holding NV0.95%
Taiwan Semiconductor Manufacturing Co Ltd ADR0.91%
Roche Holding AG0.91%
Toyota Motor Corp0.75%
LVMH Moet Hennessy Louis Vuitton SE0.68%
Novartis AG0.67%

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%.

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Risk Analysis

VIGVEU
Mean Return1.090.56
R-squared92.298.44
Std. Deviation12.2515.08
Alpha0.120.28
Beta0.860.99
Sharpe Ratio1.010.4
Treynor Ratio14.335.12

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Mean Return of 1.09 with a Treynor Ratio of 14.33 and a Standard Deviation of 12.25. Its Alpha is 0.12 while VIG’s Sharpe Ratio is 1.01. Furthermore, the fund has a Beta of 0.86 and a R-squared of 92.2.

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Alpha of 0.28 with a Sharpe Ratio of 0.4 and a R-squared of 98.44. Its Mean Return is 0.56 while VEU’s Beta is 0.99. Furthermore, the fund has a Standard Deviation of 15.08 and a Treynor Ratio of 5.12.

VIG’s Mean Return is 0.53 points higher than that of VEU and its R-squared is 6.24 points lower. With a Standard Deviation of 12.25, VIG is slightly less volatile than VEU. The Alpha and Beta of VIG are 0.16 points lower and 0.13 points lower than VEU’s Alpha and Beta.

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Performance

Annual Returns

VIG vs. VEU - Annual Returns

YearVIGVEU
202015.46%11.39%
201929.71%21.63%
2018-2.02%-13.97%
201722.22%27.27%
201611.84%4.77%
2015-1.95%-4.67%
201410.06%-4.05%
201328.99%14.5%
201211.61%18.55%
20116.21%-14.25%
201014.67%11.85%

VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% respectively.

The year 2017 was the strongest year for VEU, returning 27.27% on an annual basis. The poorest year for VEU in the last ten years was 2011, with a yield of -14.25%. Most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares has given investors modest returns, such as in 2016, 2020, and 2010, when gains were 4.77%, 11.39%, and 11.85% respectively.

Portfolio Growth

VIG vs. VEU - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VIG$10,000$37,95113.35%
VEU$10,000$18,5076.64%

A $10,000 investment in VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

With a $10,000 investment in VEU, the end total would have been $18,507. This equates to a $8,507 profit over 11 years and a compound annual growth rate (CAGR) of 6.64%.

VIG’s CAGR is 6.71 percentage points higher than that of VEU and as a result, would have yielded $19,444 more on a $10,000 investment. Thus, VIG outperformed VEU by 6.71% annually.


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