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VWO vs. DIA: What’s The Difference?

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. VWO is a Vanguard Diversified Emerging Mkts fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VWO and DIA? And which fund is better?

The expense ratio of VWO is 0.06 percentage points lower than DIA’s (0.1% vs. 0.16%). VWO also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VWO has provided lower returns than DIA over the past ten years.

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

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Summary

VWODIA
NameVanguard FTSE Emerging Markets Index Fund ETF SharesSPDR Dow Jones Industrial Average ETF Trust
CategoryDiversified Emerging MktsLarge Value
IssuerVanguardSPDR State Street Global Advisors
AUM117.28B30.46B
Avg. Return5.79%13.35%
Div. Yield1.98%1.61%
Expense Ratio0.1%0.16%

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) is a Diversified Emerging Mkts fund that is issued by Vanguard. It currently has 117.28B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 1.98% with an expense ratio of 0.1%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

VWO’s dividend yield is 0.37% higher than that of DIA (1.98% vs. 1.61%). Also, VWO yielded on average 7.56% less per year over the past decade (5.79% vs. 13.35%). The expense ratio of VWO is 0.06 percentage points lower than DIA’s (0.1% vs. 0.16%).

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Fund Composition

Industry Exposure

VWO vs. DIA - Industry Exposure

VWODIA
Technology17.06%17.32%
Industrials5.95%16.7%
Energy5.48%2.0%
Communication Services11.41%4.42%
Utilities2.55%0.0%
Healthcare5.33%17.92%
Consumer Defensive5.87%6.3%
Real Estate3.13%0.0%
Financial Services18.15%20.68%
Consumer Cyclical16.1%13.44%
Basic Materials8.98%1.21%

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has the most exposure to the Financial Services sector at 18.15%. This is followed by Technology and Consumer Cyclical at 17.06% and 16.1% respectively. Real Estate (3.13%), Healthcare (5.33%), and Energy (5.48%) only make up 13.94% of the fund’s total assets.

VWO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.87%, 5.95%, 8.98%, 11.41%, and 16.1%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.

DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.

VWO is 2.53% less exposed to the Financial Services sector than DIA (18.15% vs 20.68%). VWO’s exposure to Technology and Consumer Cyclical stocks is 0.26% lower and 2.66% higher respectively (17.06% vs. 17.32% and 16.1% vs. 13.44%). In total, Real Estate, Healthcare, and Energy also make up 5.98% less of the fund’s holdings compared to DIA (13.94% vs. 19.92%).

Holdings

VWO - Holdings

VWO HoldingsWeight
Tencent Holdings Ltd5.29%
Alibaba Group Holding Ltd Ordinary Shares4.73%
Taiwan Semiconductor Manufacturing Co Ltd4.58%
Meituan1.88%
Taiwan Semiconductor Manufacturing Co Ltd ADR1.7%
Reliance Industries Ltd Shs Dematerialised1.06%
Naspers Ltd Class N1.01%
Vale SA0.92%
Infosys Ltd0.91%
China Construction Bank Corp Class H0.84%

VWO’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Taiwan Semiconductor Manufacturing Co Ltd, Meituan, and Taiwan Semiconductor Manufacturing Co Ltd ADR at 5.29%, 4.73%, 4.58%, 1.88%, and 1.7%.

Reliance Industries Ltd Shs Dematerialised (1.06%), Naspers Ltd Class N (1.01%), and Vale SA (0.92%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the VWO’s holdings at 0.91% and 0.84%.

DIA - Holdings

DIA HoldingsWeight
UnitedHealth Group Inc7.63%
Goldman Sachs Group Inc7.23%
The Home Depot Inc6.07%
Microsoft Corp5.16%
Salesforce.com Inc4.65%
Amgen Inc4.64%
Boeing Co4.56%
Visa Inc Class A4.45%
McDonald’s Corp4.4%
Honeywell International Inc4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

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Risk Analysis

VWODIA
Mean Return0.451.13
R-squared81.6993.31
Std. Deviation17.6413.68
Alpha-1.36-0.94
Beta1.060.97
Sharpe Ratio0.270.94
Treynor Ratio3.1413.07

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a R-squared of 81.69 with a Standard Deviation of 17.64 and a Beta of 1.06. Its Sharpe Ratio is 0.27 while VWO’s Treynor Ratio is 3.14. Furthermore, the fund has a Mean Return of 0.45 and a Alpha of -1.36.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Beta of 0.97 with a Mean Return of 1.13 and a R-squared of 93.31. Its Standard Deviation is 13.68 while DIA’s Treynor Ratio is 13.07. Furthermore, the fund has a Alpha of -0.94 and a Sharpe Ratio of 0.94.

VWO’s Mean Return is 0.68 points lower than that of DIA and its R-squared is 11.62 points lower. With a Standard Deviation of 17.64, VWO is slightly more volatile than DIA. The Alpha and Beta of VWO are 0.42 points lower and 0.09 points higher than DIA’s Alpha and Beta.

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Performance

Annual Returns

VWO vs. DIA - Annual Returns

YearVWODIA
202015.32%9.63%
201920.4%25.09%
2018-14.57%-3.6%
201731.38%27.97%
201611.75%16.28%
2015-15.35%0.1%
20140.6%9.88%
2013-5.0%29.41%
201218.84%10.04%
2011-18.68%8.21%
201018.99%13.87%

VWO had its best year in 2017 with an annual return of 31.38%. VWO’s worst year over the past decade yielded -18.68% and occurred in 2011. In most years the Vanguard FTSE Emerging Markets Index Fund ETF Shares provided moderate returns such as in 2014, 2016, and 2020 where annual returns amounted to 0.6%, 11.75%, and 15.32% respectively.

The year 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.

Portfolio Growth

VWO vs. DIA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VWO$10,000$16,2005.79%
DIA$10,000$37,96513.35%

A $10,000 investment in VWO would have resulted in a final balance of $16,200. This is a profit of $6,200 over 11 years and amounts to a compound annual growth rate (CAGR) of 5.79%.

With a $10,000 investment in DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.

VWO’s CAGR is 7.56 percentage points lower than that of DIA and as a result, would have yielded $21,765 less on a $10,000 investment. Thus, VWO performed worse than DIA by 7.56% annually.


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