The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) and the iShares Core MSCI Total International Stock ETF (IXUS) are both among the Top 100 ETFs. VWO is a Vanguard Diversified Emerging Mkts fund and IXUS is a iShares Foreign Large Blend fund. So, what’s the difference between VWO and IXUS? And which fund is better?
The expense ratio of VWO is 0.01 percentage points higher than IXUS’s (0.1% vs. 0.09%). VWO also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VWO has provided lower returns than IXUS over the past ten years.
In this article, we’ll compare VWO vs. IXUS. We’ll look at annual returns and industry exposure, as well as at their holdings and fund composition. Moreover, I’ll also discuss VWO’s and IXUS’s performance, portfolio growth, and risk metrics and examine how these affect their overall returns.
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Summary
| VWO | IXUS | |
| Name | Vanguard FTSE Emerging Markets Index Fund ETF Shares | iShares Core MSCI Total International Stock ETF |
| Category | Diversified Emerging Mkts | Foreign Large Blend |
| Issuer | Vanguard | iShares |
| AUM | 117.28B | 29.54B |
| Avg. Return | 5.79% | 6.09% |
| Div. Yield | 1.98% | 2.13% |
| Expense Ratio | 0.1% | 0.09% |
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 iShares Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.
VWO’s dividend yield is 0.15% lower than that of IXUS (1.98% vs. 2.13%). Also, VWO yielded on average 0.30% less per year over the past decade (5.79% vs. 6.09%). The expense ratio of VWO is 0.01 percentage points higher than IXUS’s (0.1% vs. 0.09%).
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Fund Composition
Industry Exposure
| VWO | IXUS | |
| Technology | 17.06% | 13.24% |
| Industrials | 5.95% | 12.78% |
| Energy | 5.48% | 4.39% |
| Communication Services | 11.41% | 7.09% |
| Utilities | 2.55% | 2.95% |
| Healthcare | 5.33% | 9.29% |
| Consumer Defensive | 5.87% | 8.19% |
| Real Estate | 3.13% | 3.66% |
| Financial Services | 18.15% | 17.34% |
| Consumer Cyclical | 16.1% | 12.57% |
| Basic Materials | 8.98% | 8.5% |
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 iShares Core MSCI Total International Stock ETF (IXUS) has the most exposure to the Financial Services sector at 17.34%. This is followed by Technology and Industrials at 13.24% and 12.78% respectively. Real Estate (3.66%), Energy (4.39%), and Communication Services (7.09%) only make up 15.14% of the fund’s total assets.
IXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 8.19%, 8.5%, 9.29%, 12.57%, and 12.78%.
VWO is 0.81% more exposed to the Financial Services sector than IXUS (18.15% vs 17.34%). VWO’s exposure to Technology and Consumer Cyclical stocks is 3.82% higher and 3.53% higher respectively (17.06% vs. 13.24% and 16.1% vs. 12.57%). In total, Real Estate, Healthcare, and Energy also make up 3.40% less of the fund’s holdings compared to IXUS (13.94% vs. 17.34%).
Holdings
| VWO Holdings | Weight |
| Tencent Holdings Ltd | 5.29% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.73% |
| Taiwan Semiconductor Manufacturing Co Ltd | 4.58% |
| Meituan | 1.88% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 1.7% |
| Reliance Industries Ltd Shs Dematerialised | 1.06% |
| Naspers Ltd Class N | 1.01% |
| Vale SA | 0.92% |
| Infosys Ltd | 0.91% |
| China Construction Bank Corp Class H | 0.84% |
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%.
| IXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.64% |
| Tencent Holdings Ltd | 1.35% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.34% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.06% |
| ASML Holding NV | 0.9% |
| Roche Holding AG | 0.81% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.67% |
| Novartis AG | 0.62% |
| Toyota Motor Corp | 0.59% |
IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.
ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.
Risk Analysis
| VWO | IXUS | |
| Mean Return | 0.45 | 0 |
| R-squared | 81.69 | 0 |
| Std. Deviation | 17.64 | 0 |
| Alpha | -1.36 | 0 |
| Beta | 1.06 | 0 |
| Sharpe Ratio | 0.27 | 0 |
| Treynor Ratio | 3.14 | 0 |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a Beta of 1.06 with a R-squared of 81.69 and a Treynor Ratio of 3.14. Its Standard Deviation is 17.64 while VWO’s Sharpe Ratio is 0.27. Furthermore, the fund has a Mean Return of 0.45 and a Alpha of -1.36.
The iShares Core MSCI Total International Stock ETF (IXUS) has a Beta of 0 with a Alpha of 0 and a Treynor Ratio of 0. Its Standard Deviation is 0 while IXUS’s Mean Return is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a R-squared of 0.
VWO’s Mean Return is 0.45 points higher than that of IXUS and its R-squared is 81.69 points higher. With a Standard Deviation of 17.64, VWO is slightly more volatile than IXUS. The Alpha and Beta of VWO are 1.36 points lower and 1.06 points higher than IXUS’s Alpha and Beta.
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Performance
Annual Returns
| Year | VWO | IXUS |
| 2020 | 15.32% | 11.14% |
| 2019 | 20.4% | 21.85% |
| 2018 | -14.57% | -14.55% |
| 2017 | 31.38% | 28.08% |
| 2016 | 11.75% | 4.66% |
| 2015 | -15.35% | -4.62% |
| 2014 | 0.6% | -3.96% |
| 2013 | -5.0% | 15.85% |
| 2012 | 18.84% | 0.0% |
| 2011 | -18.68% | 0.0% |
| 2010 | 18.99% | 0.0% |
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 2017 was the strongest year for IXUS, returning 28.08% on an annual basis. The poorest year for IXUS in the last ten years was 2018, with a yield of -14.55%. Most years the iShares Core MSCI Total International Stock ETF has given investors modest returns, such as in 2011, 2010, and 2016, when gains were 0.0%, 0.0%, and 4.66% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VWO | $10,000 | $14,830 | 5.79% |
| IXUS | $10,000 | $14,209 | 6.09% |
A $10,000 investment in VWO would have resulted in a final balance of $14,830. This is a profit of $4,830 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.79%.
With a $10,000 investment in IXUS, the end total would have been $14,209. This equates to a $4,209 profit over 7 years and a compound annual growth rate (CAGR) of 6.09%.
VWO’s CAGR is 0.30 percentage points lower than that of IXUS and as a result, would have yielded $621 more on a $10,000 investment. Thus, VWO performed worse than IXUS by 0.30% annually.
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