The Vanguard Value Index Fund ETF Shares (VTV) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between VTV and EFV? And which fund is better?
The expense ratio of VTV is 0.35 percentage points lower than EFV’s (0.04% vs. 0.39%). VTV also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided higher returns than EFV over the past ten years.
In this article, we’ll compare VTV vs. EFV. We’ll look at industry exposure and risk metrics, as well as at their fund composition and holdings. Moreover, I’ll also discuss VTV’s and EFV’s annual returns, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares MSCI EAFE Value ETF|
|Category||Large Value||Foreign Large Value|
The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
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%.
VTV’s dividend yield is 0.79% lower than that of EFV (2.15% vs. 2.94%). Also, VTV yielded on average 8.08% more per year over the past decade (12.07% vs. 3.99%). The expense ratio of VTV is 0.35 percentage points lower than EFV’s (0.04% vs. 0.39%).
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The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.
VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.
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%.
VTV is 3.74% less exposed to the Financial Services sector than EFV (22.81% vs 26.55%). VTV’s exposure to Healthcare and Industrials stocks is 10.65% higher and 1.01% higher respectively (19.84% vs. 9.19% and 12.61% vs. 11.6%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 8.03% less of the fund’s holdings compared to EFV (12.17% vs. 20.20%).
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
|Toyota Motor Corp||2.21%|
|Commonwealth Bank of Australia||1.59%|
|HSBC Holdings PLC||1.4%|
|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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The Vanguard Value Index Fund ETF Shares (VTV) has a R-squared of 92.61 with a Beta of 0.98 and a Treynor Ratio of 11.94. Its Standard Deviation is 13.78 while VTV’s Mean Return is 1.05. Furthermore, the fund has a Sharpe Ratio of 0.87 and a Alpha of -1.92.
The iShares MSCI EAFE Value ETF (EFV) has a Beta of 1.05 with a Standard Deviation of 16.53 and a Alpha of -1.77. Its Treynor Ratio is 2.92 while EFV’s Mean Return is 0.42. Furthermore, the fund has a R-squared of 92.15 and a Sharpe Ratio of 0.26.
VTV’s Mean Return is 0.63 points higher than that of EFV and its R-squared is 0.46 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than EFV. The Alpha and Beta of VTV are 0.15 points lower and 0.07 points lower than EFV’s Alpha and Beta.
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VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.
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%.
VTV’s CAGR is 8.08 percentage points higher than that of EFV and as a result, would have yielded $19,029 more on a $10,000 investment. Thus, VTV outperformed EFV by 8.08% annually.
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