VTV vs. VEU: What’s The Difference?

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

The expense ratio of VTV is 0.04 percentage points lower than VEU’s (0.04% vs. 0.08%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided higher returns than VEU over the past ten years.

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

Summary

VTV VEU
Name Vanguard Value Index Fund ETF Shares Vanguard FTSE All-World ex-US Index Fund ETF Shares
Category Large Value Foreign Large Blend
Issuer Vanguard Vanguard
AUM 125.77B 53.64B
Avg. Return 12.07% 6.64%
Div. Yield 2.15% 2.31%
Expense Ratio 0.04% 0.08%

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 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%.

VTV’s dividend yield is 0.16% lower than that of VEU (2.15% vs. 2.31%). Also, VTV yielded on average 5.44% more per year over the past decade (12.07% vs. 6.64%). The expense ratio of VTV is 0.04 percentage points lower than VEU’s (0.04% vs. 0.08%).

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Fund Composition

Industry Exposure

VTV vs. VEU - Industry Exposure

VTV VEU
Technology 7.86% 12.94%
Industrials 12.61% 12.19%
Energy 5.59% 4.69%
Communication Services 5.49% 7.44%
Utilities 5.37% 2.89%
Healthcare 19.84% 9.34%
Consumer Defensive 10.72% 8.28%
Real Estate 3.01% 3.04%
Financial Services 22.81% 18.46%
Consumer Cyclical 3.79% 12.57%
Basic Materials 2.91% 8.17%

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 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%.

VTV is 4.35% more exposed to the Financial Services sector than VEU (22.81% vs 18.46%). VTV’s exposure to Healthcare and Industrials stocks is 10.50% higher and 0.42% higher respectively (19.84% vs. 9.34% and 12.61% vs. 12.19%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 6.33% less of the fund’s holdings compared to VEU (12.17% vs. 18.50%).

Holdings

VTV - Holdings

VTV Holdings Weight
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%
Intel Corp 1.36%
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%.

VEU - Holdings

VEU Holdings Weight
Tencent Holdings Ltd 1.57%
Alibaba Group Holding Ltd Ordinary Shares 1.4%
Nestle SA 1.22%
Taiwan Semiconductor Manufacturing Co Ltd 0.98%
ASML Holding NV 0.95%
Taiwan Semiconductor Manufacturing Co Ltd ADR 0.91%
Roche Holding AG 0.91%
Toyota Motor Corp 0.75%
LVMH Moet Hennessy Louis Vuitton SE 0.68%
Novartis AG 0.67%

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

VTV VEU
Mean Return 1.05 0.56
R-squared 92.61 98.44
Std. Deviation 13.78 15.08
Alpha -1.92 0.28
Beta 0.98 0.99
Sharpe Ratio 0.87 0.4
Treynor Ratio 11.94 5.12

The Vanguard Value Index Fund ETF Shares (VTV) has a Standard Deviation of 13.78 with a Treynor Ratio of 11.94 and a Mean Return of 1.05. Its R-squared is 92.61 while VTV’s Sharpe Ratio is 0.87. Furthermore, the fund has a Alpha of -1.92 and a Beta of 0.98.

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 Mean Return of 0.56. Its R-squared is 98.44 while VEU’s Beta is 0.99. Furthermore, the fund has a Standard Deviation of 15.08 and a Treynor Ratio of 5.12.

VTV’s Mean Return is 0.49 points higher than that of VEU and its R-squared is 5.83 points lower. With a Standard Deviation of 13.78, VTV is slightly less volatile than VEU. The Alpha and Beta of VTV are 2.20 points lower and 0.01 points lower than VEU’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. VEU - Annual Returns

Year VTV VEU
2020 2.23% 11.39%
2019 25.85% 21.63%
2018 -5.39% -13.97%
2017 17.12% 27.27%
2016 16.88% 4.77%
2015 -0.89% -4.67%
2014 13.19% -4.05%
2013 33.03% 14.5%
2012 15.19% 18.55%
2011 1.16% -14.25%
2010 14.45% 11.85%

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 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

VTV vs. VEU - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $33,163 12.07%
VEU $10,000 $18,507 6.64%

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 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%.

VTV’s CAGR is 5.44 percentage points higher than that of VEU and as a result, would have yielded $14,656 more on a $10,000 investment. Thus, VTV outperformed VEU by 5.44% annually.


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