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VTI vs. VEU: What’s The Difference?

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

The expense ratio of VTI is 0.05 percentage points lower than VEU’s (0.03% vs. 0.08%). VTI also has a higher exposure to the technology sector and a lower standard deviation. Overall, VTI has provided higher returns than VEU over the past ten years.

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

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Summary

VTIVEU
NameVanguard Total Stock Market Index Fund ETF SharesVanguard FTSE All-World ex-US Index Fund ETF Shares
CategoryLarge BlendForeign Large Blend
IssuerVanguardVanguard
AUM1.26T53.64B
Avg. Return14.70%6.64%
Div. Yield1.26%2.31%
Expense Ratio0.03%0.08%

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.

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%.

VTI’s dividend yield is 1.05% lower than that of VEU (1.26% vs. 2.31%). Also, VTI yielded on average 8.06% more per year over the past decade (14.70% vs. 6.64%). The expense ratio of VTI is 0.05 percentage points lower than VEU’s (0.03% vs. 0.08%).

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Fund Composition

Industry Exposure

VTI vs. VEU - Industry Exposure

VTIVEU
Technology24.1%12.94%
Industrials9.39%12.19%
Energy2.77%4.69%
Communication Services10.4%7.44%
Utilities2.29%2.89%
Healthcare13.64%9.34%
Consumer Defensive5.77%8.28%
Real Estate3.59%3.04%
Financial Services13.77%18.46%
Consumer Cyclical11.83%12.57%
Basic Materials2.44%8.17%

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has the most exposure to the Technology sector at 24.1%. This is followed by Financial Services and Healthcare at 13.77% and 13.64% respectively. Basic Materials (2.44%), Energy (2.77%), and Real Estate (3.59%) only make up 8.80% of the fund’s total assets.

VTI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.77%, 9.39%, 10.4%, 11.83%, and 13.64%.

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%.

VTI is 11.16% more exposed to the Technology sector than VEU (24.1% vs 12.94%). VTI’s exposure to Financial Services and Healthcare stocks is 4.69% lower and 4.30% higher respectively (13.77% vs. 18.46% and 13.64% vs. 9.34%). In total, Basic Materials, Energy, and Real Estate also make up 7.10% less of the fund’s holdings compared to VEU (8.80% vs. 15.90%).

Holdings

VTI - Holdings

VTI HoldingsWeight
Apple Inc4.9%
Microsoft Corp4.6%
Amazon.com Inc3.33%
Facebook Inc Class A1.88%
Alphabet Inc Class A1.66%
Alphabet Inc Class C1.56%
Tesla Inc1.18%
Berkshire Hathaway Inc Class B1.09%
NVIDIA Corp1.07%
JPMorgan Chase & Co1.06%

VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.

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

VTIVEU
Mean Return1.230.56
R-squared99.2498.44
Std. Deviation14.1515.08
Alpha-0.570.28
Beta1.040.99
Sharpe Ratio10.4
Treynor Ratio13.585.12

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has a R-squared of 99.24 with a Standard Deviation of 14.15 and a Beta of 1.04. Its Alpha is -0.57 while VTI’s Treynor Ratio is 13.58. Furthermore, the fund has a Sharpe Ratio of 1 and a Mean Return of 1.23.

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

VTI’s Mean Return is 0.67 points higher than that of VEU and its R-squared is 0.80 points higher. With a Standard Deviation of 14.15, VTI is slightly less volatile than VEU. The Alpha and Beta of VTI are 0.85 points lower and 0.05 points higher than VEU’s Alpha and Beta.

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Performance

Annual Returns

VTI vs. VEU - Annual Returns

YearVTIVEU
202020.95%11.39%
201930.8%21.63%
2018-5.13%-13.97%
201721.16%27.27%
201612.68%4.77%
20150.4%-4.67%
201412.56%-4.05%
201333.51%14.5%
201216.41%18.55%
20111.06%-14.25%
201017.26%11.85%

VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% 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

VTI vs. VEU - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTI$10,000$42,64814.70%
VEU$10,000$18,5076.64%

A $10,000 investment in VTI would have resulted in a final balance of $42,648. This is a profit of $32,648 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.70%.

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%.

VTI’s CAGR is 8.06 percentage points higher than that of VEU and as a result, would have yielded $24,141 more on a $10,000 investment. Thus, VTI outperformed VEU by 8.06% annually.


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