The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between VUG and EFV? And which fund is better?
The expense ratio of VUG is 0.35 percentage points lower than EFV’s (0.04% vs. 0.39%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than EFV over the past ten years.
In this article, we’ll compare VUG vs. EFV. We’ll look at performance and industry exposure, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VUG’s and EFV’s portfolio growth, fund composition, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||iShares MSCI EAFE Value ETF|
|Category||Large Growth||Foreign Large Value|
The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% 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%.
VUG’s dividend yield is 2.37% lower than that of EFV (0.57% vs. 2.94%). Also, VUG yielded on average 13.58% more per year over the past decade (17.58% vs. 3.99%). The expense ratio of VUG is 0.35 percentage points lower than EFV’s (0.04% vs. 0.39%).
The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.
VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.
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%.
VUG is 36.07% more exposed to the Technology sector than EFV (39.05% vs 2.98%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 8.78% higher and 10.03% higher respectively (17.78% vs. 9.0% and 16.49% vs. 6.46%). In total, Energy, Basic Materials, and Consumer Defensive also make up 18.76% less of the fund’s holdings compared to EFV (4.25% vs. 23.01%).
|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|Visa Inc Class A||1.78%|
|PayPal Holdings Inc||1.6%|
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
|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%.
The Vanguard Growth Index Fund ETF Shares (VUG) has a Alpha of 1.81 with a Sharpe Ratio of 1.13 and a Mean Return of 1.44. Its Beta is 1.04 while VUG’s Standard Deviation is 14.76. Furthermore, the fund has a R-squared of 92.48 and a Treynor Ratio of 16.13.
The iShares MSCI EAFE Value ETF (EFV) has a Mean Return of 0.42 with a Beta of 1.05 and a Standard Deviation of 16.53. Its Treynor Ratio is 2.92 while EFV’s Sharpe Ratio is 0.26. Furthermore, the fund has a R-squared of 92.15 and a Alpha of -1.77.
VUG’s Mean Return is 1.02 points higher than that of EFV and its R-squared is 0.33 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than EFV. The Alpha and Beta of VUG are 3.58 points higher and 0.01 points lower than EFV’s Alpha and Beta.
VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% 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 VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
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%.
VUG’s CAGR is 13.58 percentage points higher than that of EFV and as a result, would have yielded $40,601 more on a $10,000 investment. Thus, VUG outperformed EFV by 13.58% annually.
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