The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between VUG and VEU? And which fund is better?
The expense ratio of VUG is 0.04 percentage points lower than VEU’s (0.04% vs. 0.08%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than VEU over the past ten years.
In this article, we’ll compare VUG vs. VEU. We’ll look at industry exposure and risk metrics, as well as at their holdings and performance. Moreover, I’ll also discuss VUG’s and VEU’s fund composition, portfolio growth, and annual returns and examine how these affect their overall returns.
Summary
| VUG | VEU | |
| Name | Vanguard Growth Index Fund ETF Shares | Vanguard FTSE All-World ex-US Index Fund ETF Shares |
| Category | Large Growth | Foreign Large Blend |
| Issuer | Vanguard | Vanguard |
| AUM | 165.53B | 53.64B |
| Avg. Return | 17.58% | 6.64% |
| Div. Yield | 0.57% | 2.31% |
| Expense Ratio | 0.04% | 0.08% |
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 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%.
VUG’s dividend yield is 1.74% lower than that of VEU (0.57% vs. 2.31%). Also, VUG yielded on average 10.94% more per year over the past decade (17.58% vs. 6.64%). The expense ratio of VUG is 0.04 percentage points lower than VEU’s (0.04% vs. 0.08%).
Fund Composition
Industry Exposure
| VUG | VEU | |
| Technology | 39.05% | 12.94% |
| Industrials | 5.13% | 12.19% |
| Energy | 0.32% | 4.69% |
| Communication Services | 16.49% | 7.44% |
| Utilities | 0.0% | 2.89% |
| Healthcare | 8.09% | 9.34% |
| Consumer Defensive | 2.41% | 8.28% |
| Real Estate | 2.46% | 3.04% |
| Financial Services | 6.75% | 18.46% |
| Consumer Cyclical | 17.78% | 12.57% |
| Basic Materials | 1.52% | 8.17% |
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 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%.
VUG is 26.11% more exposed to the Technology sector than VEU (39.05% vs 12.94%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 5.21% higher and 9.05% higher respectively (17.78% vs. 12.57% and 16.49% vs. 7.44%). In total, Energy, Basic Materials, and Consumer Defensive also make up 16.89% less of the fund’s holdings compared to VEU (4.25% vs. 21.14%).
Holdings
| VUG Holdings | Weight |
| Apple Inc | 10.13% |
| Microsoft Corp | 9.52% |
| Amazon.com Inc | 6.88% |
| Facebook Inc Class A | 3.89% |
| Alphabet Inc Class A | 3.43% |
| Alphabet Inc Class C | 3.22% |
| Tesla Inc | 2.44% |
| NVIDIA Corp | 2.21% |
| 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%.
| 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%.
Risk Analysis
| VUG | VEU | |
| Mean Return | 1.44 | 0.56 |
| R-squared | 92.48 | 98.44 |
| Std. Deviation | 14.76 | 15.08 |
| Alpha | 1.81 | 0.28 |
| Beta | 1.04 | 0.99 |
| Sharpe Ratio | 1.13 | 0.4 |
| Treynor Ratio | 16.13 | 5.12 |
The Vanguard Growth Index Fund ETF Shares (VUG) has a R-squared of 92.48 with a Mean Return of 1.44 and a Sharpe Ratio of 1.13. Its Beta is 1.04 while VUG’s Treynor Ratio is 16.13. Furthermore, the fund has a Alpha of 1.81 and a Standard Deviation of 14.76.
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Beta of 0.99 with a Sharpe Ratio of 0.4 and a Standard Deviation of 15.08. Its R-squared is 98.44 while VEU’s Treynor Ratio is 5.12. Furthermore, the fund has a Alpha of 0.28 and a Mean Return of 0.56.
VUG’s Mean Return is 0.88 points higher than that of VEU and its R-squared is 5.96 points lower. With a Standard Deviation of 14.76, VUG is slightly less volatile than VEU. The Alpha and Beta of VUG are 1.53 points higher and 0.05 points higher than VEU’s Alpha and Beta.
Performance
Annual Returns
| Year | VUG | VEU |
| 2020 | 40.16% | 11.39% |
| 2019 | 37.26% | 21.63% |
| 2018 | -3.32% | -13.97% |
| 2017 | 27.8% | 27.27% |
| 2016 | 6.13% | 4.77% |
| 2015 | 3.32% | -4.67% |
| 2014 | 13.62% | -4.05% |
| 2013 | 32.38% | 14.5% |
| 2012 | 17.03% | 18.55% |
| 2011 | 1.87% | -14.25% |
| 2010 | 17.11% | 11.85% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| VUG | $10,000 | $54,735 | 17.58% |
| VEU | $10,000 | $18,507 | 6.64% |
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 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%.
VUG’s CAGR is 10.94 percentage points higher than that of VEU and as a result, would have yielded $36,228 more on a $10,000 investment. Thus, VUG outperformed VEU by 10.94% annually.
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