The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between VXUS and IEF? And which fund is better?
The expense ratio of VXUS is 0.07 percentage points lower than IEF’s (0.08% vs. 0.15%). VXUS also has a high exposure to the financial services sector while IEF is mostly comprised of AAA bonds. Overall, VXUS has provided higher returns than IEF over the past ten years.
In this article, we’ll compare VXUS vs. IEF. We’ll look at annual returns and industry exposure, as well as at their performance and holdings. Moreover, I’ll also discuss VXUS’s and IEF’s risk metrics, fund composition, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Total International Stock Index Fund ETF Shares||iShares 7-10 Year Treasury Bond ETF|
|Category||Foreign Large Blend||Long Government|
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
The iShares 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.
VXUS’s dividend yield is 1.60% higher than that of IEF (2.44% vs. 0.84%). Also, VXUS yielded on average 3.34% more per year over the past decade (8.41% vs. 5.06%). The expense ratio of VXUS is 0.07 percentage points lower than IEF’s (0.08% vs. 0.15%).
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|Taiwan Semiconductor Manufacturing Co Ltd||1.62%|
|Tencent Holdings Ltd||1.41%|
|Alibaba Group Holding Ltd Ordinary Shares||1.26%|
|Samsung Electronics Co Ltd||1.05%|
|ASML Holding NV||0.86%|
|Roche Holding AG||0.81%|
|Toyota Motor Corp||0.67%|
|LVMH Moet Hennessy Louis Vuitton SE||0.61%|
VXUS’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 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
|IEF Bond Sectors||Weight|
IEF’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Sharpe Ratio of 0.4 with a Standard Deviation of 15.12 and a Treynor Ratio of 5.14. Its Beta is 0.99 while VXUS’s R-squared is 98.39. Furthermore, the fund has a Mean Return of 0.56 and a Alpha of 0.31.
The iShares 7-10 Year Treasury Bond ETF (IEF) has a Beta of 1.59 with a Treynor Ratio of 1.97 and a R-squared of 77.56. Its Sharpe Ratio is 0.6 while IEF’s Alpha is -1.2. Furthermore, the fund has a Standard Deviation of 5.42 and a Mean Return of 0.32.
VXUS’s Mean Return is 0.24 points higher than that of IEF and its R-squared is 20.83 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than IEF. The Alpha and Beta of VXUS are 1.51 points higher and 0.60 points lower than IEF’s Alpha and Beta.
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VXUS had its best year in 2017 with an annual return of 27.52%. VXUS’s worst year over the past decade yielded -14.42% and occurred in 2018. In most years the Vanguard Total International Stock Index Fund ETF Shares provided moderate returns such as in 2010, 2016, and 2020 where annual returns amounted to 0.0%, 4.72%, and 11.32% respectively.
The year 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VXUS would have resulted in a final balance of $19,315. This is a profit of $9,315 over 9 years and amounts to a compound annual growth rate (CAGR) of 8.41%.
With a $10,000 investment in IEF, the end total would have been $13,422. This equates to a $3,422 profit over 9 years and a compound annual growth rate (CAGR) of 5.06%.
VXUS’s CAGR is 3.34 percentage points higher than that of IEF and as a result, would have yielded $5,893 more on a $10,000 investment. Thus, VXUS outperformed IEF by 3.34% annually.
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