The Vanguard Real Estate Index Fund ETF Shares (VNQ) and the iShares Core MSCI Total International Stock ETF (IXUS) are both among the Top 100 ETFs. VNQ is a Vanguard Real Estate fund and IXUS is a iShares Foreign Large Blend fund. So, what’s the difference between VNQ and IXUS? And which fund is better?
The expense ratio of VNQ is 0.03 percentage points higher than IXUS’s (0.12% vs. 0.09%). VNQ also has a higher exposure to the real estate sector and a higher standard deviation. Overall, VNQ has provided higher returns than IXUS over the past ten years.
In this article, we’ll compare VNQ vs. IXUS. We’ll look at holdings and portfolio growth, as well as at their fund composition and performance. Moreover, I’ll also discuss VNQ’s and IXUS’s industry exposure, risk metrics, and annual returns and examine how these affect their overall returns.
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Summary
| VNQ | IXUS | |
| Name | Vanguard Real Estate Index Fund ETF Shares | iShares Core MSCI Total International Stock ETF |
| Category | Real Estate | Foreign Large Blend |
| Issuer | Vanguard | iShares |
| AUM | 77.34B | 29.54B |
| Avg. Return | 11.05% | 6.09% |
| Div. Yield | 2.34% | 2.13% |
| Expense Ratio | 0.12% | 0.09% |
The Vanguard Real Estate Index Fund ETF Shares (VNQ) is a Real Estate fund that is issued by Vanguard. It currently has 77.34B total assets under management and has yielded an average annual return of 11.05% over the past 10 years. The fund has a dividend yield of 2.34% with an expense ratio of 0.12%.
The iShares Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.
VNQ’s dividend yield is 0.21% higher than that of IXUS (2.34% vs. 2.13%). Also, VNQ yielded on average 4.96% more per year over the past decade (11.05% vs. 6.09%). The expense ratio of VNQ is 0.03 percentage points higher than IXUS’s (0.12% vs. 0.09%).
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Fund Composition
Industry Exposure
| VNQ | IXUS | |
| Technology | 0.0% | 13.24% |
| Industrials | 0.0% | 12.78% |
| Energy | 0.0% | 4.39% |
| Communication Services | 0.0% | 7.09% |
| Utilities | 0.0% | 2.95% |
| Healthcare | 0.0% | 9.29% |
| Consumer Defensive | 0.0% | 8.19% |
| Real Estate | 100.0% | 3.66% |
| Financial Services | 0.0% | 17.34% |
| Consumer Cyclical | 0.0% | 12.57% |
| Basic Materials | 0.0% | 8.5% |
The Vanguard Real Estate Index Fund ETF Shares (VNQ) has the most exposure to the Real Estate sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VNQ’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
The iShares Core MSCI Total International Stock ETF (IXUS) has the most exposure to the Financial Services sector at 17.34%. This is followed by Technology and Industrials at 13.24% and 12.78% respectively. Real Estate (3.66%), Energy (4.39%), and Communication Services (7.09%) only make up 15.14% of the fund’s total assets.
IXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 8.19%, 8.5%, 9.29%, 12.57%, and 12.78%.
VNQ is 96.34% more exposed to the Real Estate sector than IXUS (100.0% vs 3.66%). VNQ’s exposure to Technology and Industrials stocks is 13.24% lower and 12.78% lower respectively (0.0% vs. 13.24% and 0.0% vs. 12.78%). In total, Consumer Cyclical, Financial Services, and Consumer Defensive also make up 38.10% less of the fund’s holdings compared to IXUS (0.00% vs. 38.10%).
Holdings
| VNQ Holdings | Weight |
| Vanguard Real Estate II Index | 11.62% |
| American Tower Corp | 7.24% |
| Prologis Inc | 5.33% |
| Crown Castle International Corp | 5.01% |
| Equinix Inc | 4.3% |
| Public Storage | 2.85% |
| Simon Property Group Inc | 2.52% |
| Digital Realty Trust Inc | 2.49% |
| SBA Communications Corp | 2.1% |
| Welltower Inc | 2.09% |
VNQ’s Top Holdings are Vanguard Real Estate II Index, American Tower Corp, Prologis Inc, Crown Castle International Corp, and Equinix Inc at 11.62%, 7.24%, 5.33%, 5.01%, and 4.3%.
Public Storage (2.85%), Simon Property Group Inc (2.52%), and Digital Realty Trust Inc (2.49%) have a slightly smaller but still significant weight. SBA Communications Corp and Welltower Inc are also represented in the VNQ’s holdings at 2.1% and 2.09%.
| IXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.64% |
| Tencent Holdings Ltd | 1.35% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.34% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.06% |
| ASML Holding NV | 0.9% |
| Roche Holding AG | 0.81% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.67% |
| Novartis AG | 0.62% |
| Toyota Motor Corp | 0.59% |
IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.
ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.
Risk Analysis
| VNQ | IXUS | |
| Mean Return | 0.89 | 0 |
| R-squared | 44.4 | 0 |
| Std. Deviation | 16.13 | 0 |
| Alpha | 2.47 | 0 |
| Beta | 0.76 | 0 |
| Sharpe Ratio | 0.62 | 0 |
| Treynor Ratio | 11.9 | 0 |
The Vanguard Real Estate Index Fund ETF Shares (VNQ) has a Mean Return of 0.89 with a Beta of 0.76 and a Sharpe Ratio of 0.62. Its Alpha is 2.47 while VNQ’s Standard Deviation is 16.13. Furthermore, the fund has a R-squared of 44.4 and a Treynor Ratio of 11.9.
The iShares Core MSCI Total International Stock ETF (IXUS) has a Sharpe Ratio of 0 with a Mean Return of 0 and a Alpha of 0. Its Beta is 0 while IXUS’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.
VNQ’s Mean Return is 0.89 points higher than that of IXUS and its R-squared is 44.40 points higher. With a Standard Deviation of 16.13, VNQ is slightly more volatile than IXUS. The Alpha and Beta of VNQ are 2.47 points higher and 0.76 points higher than IXUS’s Alpha and Beta.
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Performance
Annual Returns
| Year | VNQ | IXUS |
| 2020 | -4.72% | 11.14% |
| 2019 | 28.91% | 21.85% |
| 2018 | -5.95% | -14.55% |
| 2017 | 4.95% | 28.08% |
| 2016 | 8.53% | 4.66% |
| 2015 | 2.37% | -4.62% |
| 2014 | 30.29% | -3.96% |
| 2013 | 2.42% | 15.85% |
| 2012 | 17.67% | 0.0% |
| 2011 | 8.62% | 0.0% |
| 2010 | 28.44% | 0.0% |
VNQ had its best year in 2014 with an annual return of 30.29%. VNQ’s worst year over the past decade yielded -5.95% and occurred in 2018. In most years the Vanguard Real Estate Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 4.95%, 8.53%, and 8.62% respectively.
The year 2017 was the strongest year for IXUS, returning 28.08% on an annual basis. The poorest year for IXUS in the last ten years was 2018, with a yield of -14.55%. Most years the iShares Core MSCI Total International Stock ETF has given investors modest returns, such as in 2011, 2010, and 2016, when gains were 0.0%, 0.0%, and 4.66% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VNQ | $10,000 | $17,549 | 11.05% |
| IXUS | $10,000 | $14,209 | 6.09% |
A $10,000 investment in VNQ would have resulted in a final balance of $17,549. This is a profit of $7,549 over 7 years and amounts to a compound annual growth rate (CAGR) of 11.05%.
With a $10,000 investment in IXUS, the end total would have been $14,209. This equates to a $4,209 profit over 7 years and a compound annual growth rate (CAGR) of 6.09%.
VNQ’s CAGR is 4.96 percentage points higher than that of IXUS and as a result, would have yielded $3,340 more on a $10,000 investment. Thus, VNQ outperformed IXUS by 4.96% annually.
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